Micro-Finance and Regulations

Abstract

Financial technology (FinTech) is disrupting microfinance services for low-income groups. However, existing regulations remain anchored to traditional in-person models, lacking updated digital provisions. Doctrinal analysis reveals major gaps in current microfinance rules regarding oversight of emerging FinTech activities. While some jurisdictions have introduced initial digital regulations, comprehensive regimes remain scarce globally. Absence of bespoke rules calibrated to the nature and risks of FinTech microfinance has adverse consequences, hampering responsible innovation. Lack of tailored regulations enables predatory lending, heightens cyber risks, allows unfair consumer treatment, and creates regulatory arbitrage. This study argues regulators urgently need to develop customized legal frameworks attuned to the FinTech microfinance sphere to realize its potential while safeguarding consumers and fairness. Targeted rules on areas like security, transparency and consumer rights are vital to balance innovation and integrity as microfinance digitizes. Further research can build optimal regulatory models adapted to diverse country and sectoral contexts.