E-Bulletin, December 2006

Results of the V National Conference Microfinance in Russia: Elements of success. Prior Experience for Future Growth

On 29 November - 1 December 2006 in President Hotel, Moscow, the V National Conference Microfinance in Russia: Elements of success. Prior Experience for Future Growth was co-organized by the Russian Microfinance Center and the National Partnership of Microfinance Market Stakeholders (NAMMS). Other co-organizers of the conference included the Association of Russian Banks, the League of Credit Unions, the Russian Chamber of Commerce and Industry, and the National Union of Organizations for Mutual Financial Assistance.

The conference was supported by the following organizations: Soyuz Bank. VTB-24, TRUST Bank, KMB BANK, FORUS Bank, Yugra SME Support Fund, Intellect Credit Union, US-Russia Entrepreneurship Center, the World Bank, and Citigroup Russia.

The main purpose of the conference was to enhance the role of microfinance as an instrument of Russia's social and economic development through consolidating the efforts of all market stakeholders.

The conference featured presentations by leading Russian and international policy-makers, representatives of microfinance institutions, commercial banks, international experts, investors and other participants of the microfinance markets who discussed recent developments in microfinance and support offered to microlenders, and shared their experience of implementing microfinance programs. An important focus of the conference was a discussion of current problems and solutions.

The conference was attended by 434 people from more than 50 Russian regions, 8 NIS, and other countries. The conference participants included practitioners of credit cooperatives, SME Support Funds, federal and regional government, international financial institutions and infrastructural organizations.

The conference agenda consisted of plenaries, discussions and training sessions. Debates were organized to address controversial issues. For the first time, a business breakfast was organized for MFI leaders as part of the conference. Rooms for negotiations were made available to the conference participants.

On 30 November 2006, the plenary session and the evening reception featured an Award Ceremony honoring the winners of the Russian Microentrepreneurship Award supported by the Citigroup Microentrepreneurship Program.

A video report of the session State Policy in the Areas of SME Credits and Microfinance filmed by a TV channel is available at http://www.mbm.ru/newsitem.asp?id=46915.

The conference report including bios of facilitators and presenters, conference presentations to be viewed or downloaded, and photos taken during all conference events are available at http://conf.rmcenter.ru .

New Project: Financial Education: Improving Economic Stability and Access to Financial Services for Low-Income Households

We invite you to participate in a new project - Financial Education: Improving Economic Stability and Access to Financial Services for Low-Income Households - which will train selected partners to enable them to offer financial education to low-income households to improve their financial literacy.

We invite microfinance institutions, credit unions, NGOs working in the spheres of development and education, and relevant governmental agencies to take part in this project.

The project is expected to be launched in 2007 and co-implemented by the Russian Microfinance Center in collaboration with the Microfinance Center for Central and Eastern Europe and NIS countries (MFC).

For details of participation in the project and selection criteria, see http://www.oecd.org/document/15/0,2340,en_2649_15251491_37583951_1_1_1_1,00.html.

International Round-Table Discussion: Development and Reform of Financial Supervision in Russia

On 6 December 2006, in Moscow, an international round-table session was hosted by the State Duma - the Development and Reform of Financial Supervision in Russia - to discuss the needs for financial policy improvements.

The international round-table session was co-organized by the State Duma Committee on Credit Institutions and Financial Markets jointly with the German Directorate for Financial Supervision (BAFin), the German Bundesbank, and KfW Bank, supported by OST-EURO consulting company and RMC.

The session was attended by members of the State Duma, the Federation Council, federal government officials, practitioners of credit and insurance institutions, securities market traders, their professional associations, international experts, and mass media. Deputy Chairman of the State Duma Committee on Credit Institutions and Financial Markets MP Anatoly Aksakov chaired the session.

To inform the discussion, the session featured a report entitled Efforts to Improve Supervision in Russia's Financial Market: European Experience and Russian Realities. The report was prepared by a group of experts including: Vice President of the Association of Russian Banks Andrei Yemelin, advisor to the President of "Russia" Association of Regional Banks, expert of the State Duma Committee on Credit Institutions and Financial Markets Oleg Ivanov, RMC Director and NAMMS President Mikhail Mamuta, and Deputy CEO of OST EURO GmbH Dr. Emil Markwart.

In his presentation, RMC Director and NAMMS President Mikhail Mamuta identified a number of problems with supervision in the area of microfinance.

Other presenters and contributors included Russian officials, members of the banking community, international experts, researchers and practitioners. The participants reaffirmed the need for further discussion of this topic.

For details, see http://www.rmcenter.ru/art.php?catId=109&artId=1045&lng=1&pn=.

A Draft Federal Law aimed at facilitating the establishment of non-bank deposit-credit organizations has been recommended for introducing in the State Duma

On 20 December 2006, the Expert Advisory Council on Social and Economic Development of the United Russia Parliamentary Party supported a draft law aimed at facilitating the establishment of non-bank deposit-credit organizations (NDCO).

Members of the Expert Advisory Council on Social and Economic Development affiliated with the United Russia parliamentary party, chaired by MP Victor Pekhtin, considered draft laws prepared by the ad-hoc group of United Russia Presidium of the General Council. NAMMS President Mikhail Mamuta made a presentation about the draft federal law amending article 14 of the Federal Law on Banks and Banking.

He noted that the purpose of the draft law was to expand the circle of eligible candidates whom the Bank of Russia can approve as CEO and chief accountants of non-bank deposit-credit organizations by adding candidates with a history of working in a similar position with a credit consumer cooperative, SME support fund or another MFI.

A social and economic survey of microfinance market participants implemented by RMC between May and June of 2006 revealed MFIs' need and capacity of setting up NDCO and generated their feedback concerning the development of NDCO legislation. One MFI out of two supported the establishment of NDCO by the relevant MFI or an association where the MFI is a member. In addition, 90% of the surveyed MFI found it reasonable to expand the types of eligible candidates approved by the Central Bank as NDCO CEO, chief accountant or their deputies in NDCO or branches of NDCO by adding candidates with relevant work experience in MFIs (the remaining 10% of respondents were not sure).

Members of the Expert Advisory Council on Social and Economic Development of the United Russia Parliamentary Party agreed with the arguments presented by Mikhail Mamuta and recommended launching the draft law in the Duma on behalf of United Russia.

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