Microfinanzas BBVA Foundation

Increasing importance of regulated and supervised financial institutions

This growth is occurring along several lines:

• National banks that address intermediation with microenterprises as just another market segment and within the sphere of their normal business.
  This deepening is taking place following procedures that range from direct action with a unit specialising in microenterprises within the institution through to the incorporation of a subsidiary financial institution, including the use of a service company that is the one that deals with the microenterprise within the credit sphere; business relations are even being established between NGOs and banks.
• Banks incorporated on the basis of pre-existing financial or credit institutions.
  Such institutions are emerging through the purchase of non-banking institutions by a technically qualified investor, as in the case of Bancamía in Colombia involving an investment holding taken by the BBVA Microfinance Foundation in conjunction with the contribution made by the women's banks, Bancos de la Mujer, in Medellín and Bogotá.
• Multiplication of banks created specifically (Greenfield).
  These are institutions that are incorporated ex novo expressly for intermediation with microenterprises. They are normally sponsored by mutual funds or holdings and associated companies providing technical assistance.
• Entry of international banks.
  Certain financial institutions headquartered in developed countries are acquiring holdings in local institutions, which are quite often regulated, seeking both their institutional development and financial return.
• Major expansion of NBFIs.
  The legal statuses of these institutions are usually listed amongst what are referred to as Non-Banking Financial Institutions (NBFIs), which are included within regulated and supervised institutions, although in some countries they have another specific name, as is the case of the Bancos de Desarrollo (Development Banks) in Venezuela, the Microfinance Deposit-taking Institutions in Uganda, and the Depositary Microfinance Institutions in Afghanistan.
• Transnational movements.
  Successful financial institutions are identified in each country, with their own methodology for intermediating with microenterprises, which are setting up institutions in other countries seeking markets whose level of development provides better prospects for financial return than the country of origin.
• Cooperative savings and credit institutions are slowly advancing in the process of specific regulation and supervision by the monetary authority.
  Based on a relative importance in the intermediation with microenterprises, with a different presence according to each country, no increase has been detected in the total number of these institutions, although there is a gradual incorporation of a specific regulation consistent with their financial operations, and of supervision under the ultimate responsibility of a central monetary authority, superintendence or central bank.