Appendix I Reference Materials
The current nonbank sector also includes insurance and securities market segments. For convenience, in this report, the term “nonbank sector” refers to the current nonbank lending institutions, including MFIs and LIEs.
Capital adequacy requirements are based on a non-risk weighted ratio of regulatory capital to assets. For those MFIs which attract funds from individuals in excess of 50 percent of regulatory capital, requiring a ratio of 24 percent is required, and for those not meeting that threshold, 18 percent is required. Both capital and liquidity requirements are higher than those on the bank side, reflecting the higher risk in the nonbank sector.
Similarly, liquidity requirements are based on a ratio of liquid assets to average current liabilities. For those MFIs which attract funds in excess of 50 percent of regulatory capital, a ratio of 25 percent is required, and for those not meeting that threshold, 18 percent is required.
These jurisdictions include Mongolia, Papua New Guinea, Serbia, and Uzbekistan
IMF Working Paper: From Basel I to Basel III: Sequencing Implementation in Developing Economies, June 2019. See link to working paper in reference section at the end of this report.
Basel Committee on Banking Supervision “Range of practice in the regulation and supervision of institutions relevant to financial inclusion”. January 2015.
Basel Committee on Banking Supervision “Guidance on the application of the Core Principles for Effective Banking Supervision to the regulation and supervision of institutions relevant to financial inclusion”, September 2016.
The NBG calculates the current liquidity ratio as liquid assets (cash and cash equivalents) less long-term liabilities and other adjustments as a percentage of total assets.
GRAPE assesses risk in the following categories: credit risk, liquidity risk, market risk, operational risk, business model, profitability, macroeconomic environment, group structure, and corporate governance. GRAPE also provides for potential bank access to resources in case of risk realization.