OVER-REGULATION MAY CRIPPLE MFI SECTOR,FEARS CENTRE
Microfinance to get a regulator in Nabard……Deepshikha Sikarwar
Microfinance to get a regulator in Nabard……Deepshikha Sikarwar
AWORRIED government has put on fast track the proposed bill to regulate micro-lenders,as it seeks to ensure that over-regulation by states does not kill the sector that is envisaged to play a big role in furthering financial inclusion.
The finance ministry could move a bill in the winter session of Parliament that will make Nabard responsible for regulation of all non-profit microfinance institutions structured as trusts,cooperatives,or mutual benefit societies.
Finance minister Pranab Mukherjee has put the bill on priority list for winter session, a finance ministry official told ET.
At present,micro-lenders follow the relevant sector law,depending on the way they are structured.The new law will treat microfinance as a separate business and will also consider bringing nonbanking finance companies in the microfinance sector under the ambit of the legislation.The decision to fast-track the bill follows the October 15 ordinance,or emergency law,issued by Andhra Pradesh that imposed severe restrictions and debt restructuring obligation on lenders following a spate of suicides that were blamed on coercion by microlenders to recover their dues.
The sudden sacking of Suresh Gurumani as MD & CEO of the recently listed SKS Microfinance on October 4 by the companys board has also drawn attention to the industry.
As many as 15 states already have laws on money lenders in place under which they attempt to regulate the high interest rates and usurious practices followed by micro-lenders.