From Business Insider By Linette Lopez February 27, 2014 Yesterday, Max Baucus (D-MT) and Dave Camp (R-MI)...
MFIs were originally established in Timor-Leste as UN administered entities, which have converted to 100% state-owned commercial banks with a pro-poor orientation. MF services have been provided by two NGOs or foundations and credit union.
As Timor-Leste has been an independent country for only ten years, the regulator is constantly changing. The UN administration Central Payment Office (CPO, 2000), which under United Nations Transitional Administration in East Timor (UNTAET), was replaced in 2001 by the Banking and Payment Authority (BPA, 2001). With implement of the Organic Law of Central Bank of Timor-Leste in 2011, the role of regulator has formally transferred from the BPA to the Central Bank.
In 2010, BPA issued Public Instruction On the Licensing and Supervision of Other Deposit Taking Institutions (ODTIs), which requires non-bank financial institutions be licensed for taking deposit. The only two NGOs providing MF services should be registered and supervised ODTIs, before which the ability to mobilize deposit was unclear. The regulation on MFIs in Timor-Leste is stricter than before, for the Public Instruction requires ODTIs keep no less than 20% capital adequacy ratio.
The legal infrastructure has been gradually changed from the UN administrated framework into independent Timor-Leste law, although the former regulations are still in effect if they do not contradict with newly passed legislation. Because the Central Bank has taken the place of the BPA, the ODTIs are under supervision of Central Bank since 2011.
Microfinance & Banking
Central Bank of Timor-Leste has succeeded the role of regulator from Banking and Payment Authority(BPA) since Organic Law of Central Bank enforced in 2011. MFIs in Timor-Leste are provided from NGOs, credit unions and also commercial banks, which were converted from former UN administration. MFIs in Timor-Leste has more legal position to take deposit since Instruction for ODTIs issued.
- Decree Law No.5/2005 Non-profit-making Corporate Bodies (enacted in 2005) (English)
- Instruction CPO/B-2000/2 on Regulatory Capital (enacted in 2000) (English)
- Instruction CPO/B-2000/3 on Bank Liquidity (enacted in 2000) (English)
- Instruction No.03/2003 on the Opening and Maintenance of Deposit Accounts (enacted in 2003) (English)
- Law No. 5/2011 Organic Law of the Central Bank of East Timor (enacted in 2011) (English)
- Law No.17/2011 Legal Regime Covering the Prevention of and Combat against Money Laundering and Financing of Terrorism (enacted in 2011) (English)
- Public Instruction N.°06/2010 On the Licensing and Supervision of Other Deposit-Taking Institutions (enacted in 2010) (English)