Greater Access to Retail Finance: Measures to Promote Microfinance in the Russian Federation

This is a Microlinks community contribution.

The purpose of this Concept Note is to define key areas of building an all-inclusive financial system to improve access to retail finance in the Russian Federation. This Concept Note provides an assessment of current access to retail finance in Russia; identifies client target groups in need of greater access to finance; identifies financial intermediaries to be involved in expanding access to retail finance; provides a summary of recommendations for better policy options and a summary of regulatory measures to be pursued by the government to enable the emergence of needed institutions and technologies in the finance market. In particular, the Concept Note highlights the links between financial inclusion and living standards, thriving entrepreneurship and SME, and other social and economic objectives.

The Concept Note highlights a few key areas for an inclusive financial system:

• expand and diversify banks‟ branch networks, reduce the costs of expansion;
• facilitate microlending by banks (lending to low-income households, start-ups and microfinance institutions);
• promote non-bank microfinance institutions; encourage new technology making it possible to provide financial services outside bank offices – the so-called branchless banking;
• enable large non-bank microfinance providers to transform into regulated credit institutions (banks) to ensure continued growth of their functional capacity and transaction volumes; and
• improve the financial literacy of the general public and SME operators.