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