Now that Kiva is beginning in India, some of us may be interested in looking in more detail regarding the highly detailed and complex world of micro-lending regulation in India. First, a few general points: The Reserve Bank of India (RBI) (the central bank) regulates many features of micro-lending, including maximum loan size (no commercial loans masquerading as micro-loans in India!), packaging and many other factors. There was a new master regulation covering micro-loans that was released by BRI on 2 July this year, only a month ago, and includes all regulations released through 30 June 2012. This makes life far easier for everyone who had to meander through disconnected regulations before last month: http://rbidocs.rbi.org.in/rdocs/notification/PDFs/93MCDS020712.pdf This is the RBI regulation dealing with External Commercial Borrowings, including specific provisions for foreign borrowings by MFI's. This regulation explicitly does NOT mandate a minimum maturity of three years, but an average maturity of three years, a vastly different limitation, which will produce a typical tenor of five to six years, depending on interest rates and repayment schedules. Kiva may have been given special dispensations under these regulations. BTW, NGO's engaged in Micro-Finance are required to fully hedge FX risk, a big plus for us as lenders. The details below are taken from the RBI circular of May 1, 2012 http://www.iibf.org.in/documents/guidelines-on-ecb.pdf This is the RBI regulation on hedging. India is one of only a tiny group of countries taht explicitly allows MFI's to hedge FX risk, greatly easing foreign borrowing risk for borrowers, and reducing risk for foreign lenders. The specific dispensations for FX risk heding in micro-finance are included in the regulation below: http://rbidocs.rbi.org.in/rdocs/Content/PDFs/DCGF12112009.pdf In the first and third attachments regulations covering other business are included also. Most of us will not care. Some of us might be interested to see how far the RBI has gone to clean up and facilitate micro-lending. IN the second attachment some of us might also be interested to see the specific provisions for individual States, sectors and areas. This is yet another illustration that micro-loans in India are different than they are elsewhere and more importantly, they are a hot political topic also. If anybody really wants to know more there is much, much more information available. For any of us who want to lend to India is it a very good idea to understand some fo these issues before tying up your money for several years.