New
Delhi: The finance ministry has opposed capping interest
rates for small loans under the Micro Finance Bill and
is opposed to the views of the Left parties and certain
members of the Standing Committee of Parliament.
The
Micro Finance Bill introduced in Parliament, is currently
under consideration of the Standing Committee.
According
to the source, the finance ministry had brought to the
notice of the Standing Committee that at a time when money
lenders and commission agents were charging as much as
50-300 per cent interest, there should be any limit on
interest rate for organised players like banks and financial
institutions as this would discourage them to lend to
micro-finance institutions.
The
FinMin said that more competition, the interest rate would
come down, now in the range of 24-30 per cent.
According
to estimates, there are over 800 micro-finance institutions
operating in India in various forms trusts, societies,
cooperatives and non-banking finance companies.
The Bill, which was introduced by Finance Minister P Chidambaram,
seeks to regulate small micro-credit institutions through
the National Bank for Agriculture and Rural Development
(Nabard), requiring them to meet stringent accounting
standards.
However,
the Bill does not contain any provision regarding ceiling
on interest rates that could be charged from the borrowers.
Another
official source said due to differences among the members
of the Standing Committee and opposition from the Left
parties, the Bill could not get Parliamentary approval
during the Budget session.
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