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Annual Policy Conference on Microfinance
The 2-day conference saw a focussed discussion on the issues and concerns of financial services including the poverty challenge in financial inclusion, scale of inclusion and challenge of human resources, scope and challenges of using technology for financial inclusion, role of community-based organization in changing the paradigm of the sector and most importantly, the debate over the Microfinance sector Bill-2007.

The 2-day Annual Policy Conference on Microfinance was organised by Sa Dhan, Pawan Kumar Bansal, Minister of State for Finance, Govt. of India.

Pawan Kumar Bhansal stated that "While the Government was highly appreciative of the services rendered by microfinance institutions in extending the outreach, the current policy regime has an important poser as to whether there should be a cap on microfinance interest rates. In particular, it takes on all the more importance as the Bill to regulate the microfinance sector is with the Standing Committee.

He remarked that only 27 per cent of the rural population had access to credit in rural areas through institutional sources, and that the mainstream banking system should persevere to provide relief to the needy rather than discriminate against them. Reflecting on the cap on interest rates suggested, he said that, if not a cap, there should be at least some reflection to the prime lending rate. Shri Bansal hoped that the deliberations of the Conference would go a long way in providing suggestions to the government towards addressing the issues confronted.

Amitabh Verma, Jt. Secy, Ministry of Finance emphasised the need to look outside the well regulated financial structure and make sure that the mFI movement does not fall into the same trap due to excessive regulation. He drew attention to the fact that RBI does not come down heavily on self-help groups even though they are authorised to regulate and supervise the sector. He added, "Once the Bill gets passed, we will have a regulation since we agree that charges need to be regularised at some percentage of interest rates per annum."

The 2-day conference saw a focussed discussion on the issues and concerns of financial services including the poverty challenge in financial inclusion, scale of inclusion and challenge of human resources, scope and challenges of using technology for financial inclusion, role of community-based organization in changing the paradigm of the sector and most importantly, the debate over the Microfinance sector Bill-2007.

The discussions were attended by a galaxy of eminent speakers and participants representative of the community, NGOs, Banks, Regional rural banks, International donors and policy makers. The 2-day conference is being sponsored by SIDBI and NABARD (principal sponsors), United India Insurance, FINO, GIPSA & Canara Bank (Co-sponsors).

Setting the tone of the Conference, Mathew Titus, Executive Director, Sa Dhan, in his introductory remarks at the inaugural session, drew attention to the fact that the focus of the conference was on the character of microfinance institutions (mFIs) and how they would evolve as they attained larger scales in terms of debt and outreach. Jagadananda, Chair, Sa-Dhan remarked that poverty issues should be addressed by dealing with the structural causes. R M Malla, CMD, SIDBI pointed out how mFIs had emerged as the most effective financial institution to serve the poor without compromising on its sustainability.

Releasing the book, "Towards an Inclusive Financial System", published by Sa-Dhan, Ela R Bhatt, Chair Emeritus, Sa-Dhan said that the study would go a long way in furthering the ability of microfinance practitioners towards effectively negotiating with government, banks and other funding agencies.

Dr Arjun Sengupta, Chairman, NCEUS in his inaugural address, drew attention to the problem of identification of poverty. The Conference he said, presumes all the more importance in the context of the Standing Committee of Parliament deliberating over the regulatory structure of the microfinance sector. The financial sector, he said, was giving consideration to the loan waiver in the commercial banking system.

Sandeep Ghosh, Exec Director, Invest India Market Solutions Pvt Ltd. said that the disintegration of the joint family system had contributed to increased incidence of poverty. He maintained that Southern and Western states save more than the rest of India.

Chairing the session, Dr. Raghuvansh Prasad Singh Hon'ble Union Minister, Rural Development observed that generating employment was key to the solution of poverty. To discourage distress migration to cities, he emphasized the importance of self employment through vocational training. He suggested the formation of more self help groups to provide employment to people living below the poverty line.

Vijay Mahajan, Member, Committee on Financial Inclusion, GOI said that financing the poor and sustainability could not go hand in hand. Rajiv Malhotra, Additional Economic Advisor, Ministry of Finance, GOI, maintained that poverty is the single most important hurdle to a poor household accessing finance from formal financial institutions. Mary Ellen Iskenderian, President and CEO, Women's World Banking said that micro insurance could protect low income households from falling into destitution.

Sanjay Sinha, MD, M-Cril observed that only 25 per cent of the 140 million low income people have access to the formal banking system & that a slow start had been made in commercial micro insurance, with rudimentary cover for 15 million below poverty households. Mr. Arvind Virmani, Chief Economic Advisor, Ministry of Finance, GOI, reflected on two basic things about credit -transaction cost and risk. He noted that providing services would not be sustainable if the costs were not covered. He also underlined the need to reduce the transaction cost to make credit service accessible to needy.

R.Gandhi, Regional Director, RBI, elaborating on the role of RBI in financial inclusion, explained the role of the apex bank in creating favourable and enabling regulatory environment. Kalpana Pant, Project Coordinator, Chaitanya, observed that the present SHG-Bank linkage model did not provide adequate loans for a long enough period to be useful for asset creation. Referring to Kalpanas' presentation, Amar Singh, Jt Secretary, Ministry of Rural Development, reminded the audiences that federations often face a clash of interest and often fail to operate in co-operative way.

Abhijit Sharma, Indian Institute of Bank Management in his presentation on initiatives in the North-East Region said that with low density of population, these states are in the bottom rung of most of the indicators. Population below poverty line in the region is at 35% compared to the national average of 26%. He remarked that only higher grant amounts can lead to sustainable SHG movement.

The final session of the 2-day conference deliberated on the way forward and observed that like previous years this conference would also make a major breakthrough in streamlining the architecture of the financial landscape meant to reduce poverty in Indian and thereby set an example for others.
Source :
Indiainfoline.com
 
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