New regulations give greater access to microfinance services
UNDP “Support to Development of Microfinance Sector” (Microfinance) project organized a session, on April 29, to discuss amendments to regulations of how microcredit organizations (MCOs) work. Among the participants were representatives from the Central Bank, the Ministry of Justice, the National Association of Microcredit Organizations and Credit Unions, the Association of Credit Unions of Uzbekistan and other organizations.
Over the course of the discussion, draft normative documents, regulating accounting and audit of MCOs and other microfinance institutions (MFIs) were presented and reviewed. The participants also discussed and approved drafts of regulations that will introduce new requirements to credit policy and ensure financial sustainability of MFIs.
Through introduction of new accounting and auditing regulations as well as implementation of International Accounting Standards, operational expenses of MFIs will significantly decrease due to automation of accounting processes and reduction of paperwork. For instance, instead of filling out 9 paper forms while repaying microcredits, clients will sign only 1 paper. Furthermore, instead of processing and providing vast accounting reports every 10 days, MCOs will be allowed to report once a month. Thus, MCOs will be able to provide high quality services to larger number of clients without increasing staff.
Moreover, submission of accounting documents, such as memorial orders will no longer be required, which will reduce operational expenses of MCOs and save at least 5 working days with staff having more time to serve more clients. This will ultimately reduce interest rates on microcredits and ensure financial sustainability of MCO operations ensuring better access to microfinance services.
Other changes in the accounting regulations will contribute to set up of more MCO branch networks, as MCO branches are optimal schemes in creating more opportunities for people to access microfinance services and fostering strategic development of the microfinance sector.