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Regulating micro-credit in Europe. «SMEs and Entrepreneurship – Successful Local Strategies » Porto, 7 December 2007. Cindy Fökehrer. Regulating micro-credit in Europe. Structure of presentation: Who are the providers? How are they regulated? - PowerPoint PPT Presentation
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Enterprise and Industry
European Commission
Regulating micro-credit in Europe
«SMEs and Entrepreneurship – Successful Local Strategies »
Porto, 7 December 2007
Cindy Fökehrer
Regulating micro-credit in Europe
Structure of presentation:
• Who are the providers?
• How are they regulated?
• What can be done to improve the provision of microcredit?
Terminology
• Micro-credit: a loan up to € 25 000
• Provider: any formal organisation that has as its primary purpose to provide loans up to € 25 000 for entrepreneurial activity
Legal entities involved
• Banks Commercial banks Savings banks Co-operative banks
• Public banks
• Financial co-operatives, credit unions
• NGOs (various forms)
• Government-run and/or government-owned financial service entities
Types of regulation
• Prudential regulation (and supervision) “Banking law” At European level: Capital Requirements Directive
• “deposit-taking”
• Non-prudential regulation Protecting against abusive lending and collection practices Protecting against fraud and financial crimes
• Other “non-prudential regulation” Tax issues In a wider sense:
• social security systems, • regulatory environment related to entrepreneurial activity:
business registration, • etc. …
“Special window”
France Exemption for special organisations to
lend directly to their borrowers• For special target groups
Elimination of usury rate
+ a fund: “Borloo” law on social cohesion
Romania Law on microfinance companies No. 240 Government ordinance 28
“Enabling regulation”
UK• Community Development Finance Institutions
(CDFIs)• Code of Conduct
“Regulation as promotion”• Tax incentives:
UK: Community Investment Tax Relief (CITR) IRL: Seed capital scheme NL: Tante Agaath Regeling
Enterprise and Industry
European Commission
Report 31.04.2007
26 experts from 20 Member States and two European practitioners:
Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Finland, France, Germany, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Portugal, Romania, Slovak Republic, Sweden, Turkey and United Kingdom.
Recommendations of the report
1. Allow for lending by non-banks
2. Avoid setting interest rate caps too low
3. Ensure minimum legislative standards for non-banks
4. Create a favourable general environment for micro-enterprises
The micro-credit initiative
• “A European initiative for the development of micro-credit in support of growth and employment”
COM(2007) 708 final adopted on 13.11.2007
The micro-credit initiative
Four strands:
1.Improving the legal and institutional environment in the Member States
2.Further changing the climate in favour of entrepreneurship
3.Promoting the spread of best practices, including training
4.Providing additional capital for micro-credit institutions
Useful links
• Policies on access to finance europa.eu.int/comm/enterprise/entrepreneurship/financing/ http://europa.eu.int/comm/enterprise/entrepreneurship/financing/publications_documents.htm
• Financial instruments europa.eu.int/comm/enterprise/entrepreneurship/financing/
instruments.htm http://eif.org
• CIP programme: http://europa.eu.int/comm/enterprise/enterprise_policy/cip/
index_en.htm
• JEREMIE programme: http://ec.europa.eu/regional_policy/funds/2007/jjj/jeremie_en.htm
Contact
Cindy FökehrerEnterprise & Industry Directorate-GeneralFinancing SMEs, entrepreneurs & innovatorsEuropean CommissionB-1049 BrusselsFax +32 2 295 21 54
Email: [email protected]