New Delhi, Nov. 15: With microfinance institutions (MFIs) drawing flak for their strong arm tactics, the government on Monday said it expects to arrive at a consensus soon on selecting a regulator for these institutions and place a bill in Parliament in four months.
“We expect a consensus soon (on MFI regulator) ... We expect it to be in Parliament in 3-4 months,” the financial services joint secretary, Mr K. V. Eapen, said at the Microfinance India 2010 summit. He said the lack of a single regulator for MFIs is a matter of concern.
“In actual fact, it (lack of a regulator) is a quagmire.” Mr Eapen said.
The government and the MFI sector players are in talks to find out a common ground for having a regulator. Micro finance institutions, which lend money to those in the unorganised sector, are not regulated by any single watchdog.
Those who come under the category of non-banking finance companies (NBFCs) are regulated by RBI, while others are governed by norms of the sector they fall in.
“The aspects of a regulator’s job could include a variety of issues such as framing proper legislation, developing proper guidelines on terms of operational issues and identifying the cost of intermediation,” he said, and added that he supported the inclusion of MFIs as business correspondents for banks.
The government was originally supposed to bring the MFI bill in this session of Parliament. But, an increase in the number of suicides by the poor in Andhra Pradesh was blamed on the functioning of MFIs and their usurious interest rates.