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Compliance Crucial for Myanmar’s Finance Industry Amid Microfinance Shortfall

A recent report has highlighted the urgent need for sustainable and credible microfinance institutions in Myanmar, where demand exceeds supply by a staggering four times. As the country emerges from decades of isolation, the lack of financial access to the poor is holding back development.

The Microfinance Landscape

According to the joint IFC/CGAP report, Myanmar’s banking sector has struggled to extend financial services to the underprivileged due to commercial challenges. Consequently:

• Fewer than 20 people out of every 100 have access to formal financial services
• Most rely on family savings or costly alternatives such as informal money lenders

Opportunities for Growth

Despite this shortfall, the market is large enough to attract both domestic and international banks, which could significantly improve outreach and drive innovation in the sector. With a population of around 60 million, Myanmar presents an attractive opportunity for financial institutions to make a significant impact.

The Importance of Compliance

The report, based on data gathered during a joint IFC-CGAP mission to Myanmar in June 2012 and subsequent research, provides a preliminary analysis of the microfinance landscape and related macroeconomic and financial sector developments. However, it cautions that the information should not be considered definitive due to the limited publicly available information in Myanmar and the nascent stages of its financial and microfinance sectors.

Prioritizing Compliance

In light of these findings, compliance is crucial for Myanmar’s finance industry to ensure a robust regulatory framework that promotes responsible lending practices and protects vulnerable borrowers. As the country continues to develop its financial sector, it is essential to prioritize compliance and build trust among consumers and investors alike.