New Delhi, Oct. 26: The finance minister, Mr Pranab Mukherjee, refused to throw his hat in the ring on microfinance. The government is not thinking of appointing a regulator for the microfinance sector, he said on Tuesday. It wants the lenders to come up with a self regulatory code to take care of high interest rates and strong arm recovery tactics. States are within their rights on bringing regulations governing the sector, he said.
“Currently I am not thinking of appointing any regulator. Nabarad, RBI, and the government are watching the situation,” Mr Mukherjee said at the Economic Editors’ Conference. There were reports that Nabard (National Bank for Agrciultural and Rural Development) could be appointed as regulator for MFIs.
Mr Mukherjee said that he has spoken to the Andhra Pradesh chief minister to see that steps are taken to “see that harsh provisions are taken care of” when the regulation is brought.
The Andhra Pradesh government had brought out an ordinance barring microfinance companies from collecting any debts till they were duly registered, a process which the industry claims can take a month and a half.
The ordinance came after there were reported cases of depositors, who had borrowed from MFIs, committing suicide following coercive methods of loan recovery.