New
Delhi: The government plans to introduce a new Bill
in the forthcoming budget session to regulate and develop
microfinance institutions, to improve access of credit
to the poor.
Microfinance institutions (MFIs) will be regulated by
the National Bank for Agriculture and Rural Development
(Nabard), which would frame lending, deposit and recovery
methodologies for these institutions.
There
will be stricter regulation for MFIs that accept deposits,
while non-deposit institutions engaged in lending to self
help groups would be least regulated said government sources.
There would be no cap on interest rates for lending by
MFIs.
In
the banking system, the cost of transactions is borne
by borrowers, while in the case of micro-financing the
cost of transaction is borne by micro credit institutions.
The
MFI Bill will validate activities of MFIs like thrift
collections, provide equity support, define microfinance
services and give regulatory powers to Nabard.
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