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RBI appoints Malegam to head MFI sub-committee
MUMBAI: The Reserve Bank of India has appointed chartered accountant and a long-standing member of RBIís central board Yezdi H Malegam to head a sub-committee to study concerns in the micro-finance sector. The committee is expected to submit its report in three months.

RBI has said the terms of reference would include conducting a study of concerns expressed in the media about high interest rates, coercive recovery processes and multiple lending practised by some microfinance institutions.

RBI has also made a note of the ordinance passed by the state of Andhra Pradesh making registration of microfinance institutions (MFIs) with the state government compulsory.

A statement by RBI said the board subcommittee would look into these and other related issues and implications for its policies, given the useful role played by the microfinance institutions in providing access to financial services to the poor and excluded . The panel would also recommend ways and means of making interest rates charged by them reasonable.

RBI regulates only those MFIs which are registered with it as non-banking finance companies. Although registered companies cover over 80% of the microfinance business , in terms of number of companies, they constitute a small percentage of the total number of MFIs in the country. The RBI, however, does not prescribe lending rates for these institutions.
Source :
The Economic Times
 
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