Frontiers of Rural and Microfinance

This paper discusses the evolution of microfinance from directed credit to inclusive financial systems. It discusses numerous notable new developments in Rural and Microfinance (R/MF), and notes that in the majority of countries, there are still major shortcomings that call for country-driven, coordinated interventions. It provides recommendations to help bridge the relative isolation of the rural and semiformal MFIs. The paper also stresses on key matters in rural microfinance, such as client experience, financial systems etc. Some of the conclusions suggested are:

• Support the development of appropriate legal frameworks, conducive regulation and effective (delegated) supervision of self-reliant and sustainable RMFIs in private, cooperative and community or public ownership;
• Support linkages of informal and semiformal RMFIs, including self-help groups in remote and marginal areas, with the banking sector, and their upgrading to recognized or regulated institutions;
• Support the injection of equity into RMFIs for bridging and leveraging purposes;
• Support RMFIs in establishing business associations with apex services to member institutions;
• Initiate cooperation between research funding and development agencies in RMF and provide funding for longitudinal impact studies.