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Microfinance regulation is no longer a new field. Much has been written about it and even more has been done in terms of actually implementing these new ideas. In a number of countries throughout the world, legal frameworks for microfinance have been amended. This paper attempts to explore the main aspects of the current debate on the regulation and supervision of microfinance in Egypt. It mainly argues that appropriate regulation and supervision of microfinance is critically important as there is broad awareness that poor people have different financial service needs. In order to reach its full potential the microfinance industry in Egypt must eventually be able to enter the area of licensed, supervised financial intermediation to be able to capture and minimize any financial crisis or crimes that may possibly occur. Moreover, The paper presents the Risk Based Supervision (RBS) Framework for supervision of financial institutions, including Financial Institutions Engaged in Microfinance, hereinafter collectively referred to as ‘institutions’ to provide an effective and efficient process to assess the safety and soundness of the institutions. The paper was viewed as a work in progress on which further adjustments could be made, based on analysis of selected country experiences from the field. The paper provides guidelines to all microfinance institutions in Egypt on risk standards that shall be expected of risk management framework at any microfinance institution. It provides those involved in drafting legal texts for microfinance with a commented inventory of regulatory requirements for MFIs. The study does not offer a template for a microfinance law or for the amendment for current legislation so that it becomes more “microfinance-friendly”. But it may help in drafting regulations in Egypt so that they neither have to reinvent the wheel, nor find themselves limited to referring to microfinance legislation from only a few other countries as a reference point. Given the dynamic nature of its subject matter, we will briefly indicate how more in-depth assessments of legal frameworks for microfinance could appear. In the course of our work, a clearer picture of the main elements of legal frameworks for microfinance has emerged to conduct comprehensive assessments of microfinance regulation in Egypt.
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