Posted in Legislative Analysis, Political Institutions on Oct 31, 2019

This Bill is assumed to have been submitted by the Ministry of Planning and Finance. Its stated objectives are to support the financial sector by creating a level playing field, and for access to credit to enrich socio-economic, education and health outcomes.


A previous Microfinance Business Law was submitted by the Ministry of Finance during the First Hluttaw and approved as The Pyidaungsu Hluttaw Law No. 13/2011. There were attempts to amend or substitute the law in 2014.

Post-legislative scrutiny

During the 12th regular session of Second Hluttaw, the Pyithu Hluttaw Banking and Financial Development Committee submitted a report about microfinance. It was a post-legislative scrutiny study, and in the report (dated 21/05/2019), the committee suggested a new updated law be drafted. The report included observations, findings and analysis, that emphasise the need for a new law.

According to the report, 5 international non-governmental organisations (INGOs), 22 national NGOs, 39 foreign companies, 107 national companies and 3 joint ventures were active in the field of microfinance between the previous law’s approval and January 2018. The total start-up capital provided was 327,987.830 million MMK, plus other loans of 3,652,990.180 million MMK, provided to 3,088,288 recipients. The report also indicates that microfinance is reaching 6 per cent of the total population until July of 2017, and since there were 424,663 recipients in January of 2018, the coverage could reach to almost 7 per cent.

Findings of the report included evidence of breaching the terms and conditions of the loan agreement by recipients, the servicing of debt with further high interest loans, and borrowers accessing loan from more than one microfinance provider, often more debts than they can afford to service. Moreover, it shows the incapability of loans in reaching more remote places in greater need, and the widespread existence of illegal creditors.

Market issues in microfinance often stem from the existence of more than one microfinance provider in the same area, raising questions of the ideal policies for licensing of the industry, and a need to reexamine procedures, including suggested transformation of INGOs and NGOs into companies along with an updated new law.

Ministry’s explanation

The Ministry of Planning and Finance responded to the report, explaining a drafting process for a new law. Five months after the submission of the report by Pyithu Hluttaw Banking and Financial Development Committee, this Bill was posted on the website of Pyidawsu Hluttaw on 16th of October 2019.

Interesting point of the bill

In the Microfinance Business Law 2011, there were three committees involved in microfinance – Rural Development and Poverty Alleviation Working Committee, Microfinance Business Supervisory Committee and Microfinance Business Development Working Committee. But in this Bill there are only two committees, as it leaves out the Rural Development and Poverty Alleviation Working Committee.

The Ananda will continue Bill analysis of the Microfinance Business Bill, as an examination of an example of post-legislative scrutiny measuring the impact of the law and informing new legislation