The Finance Minster, P. Chidambaram has said that Micro-Finance Institutions Bill is being developed to act as a legislative framework for the working of the institutions engaged in micro finance sector in the country. At present, the Bill is under the review of a Parliamentary Standing Committee.
Talking on the matter, the Finance Minster said, "We are hopeful that the Bill will be cleared by the Standing Committee, then brought to Parliament for passage. Once the Bill is passed, I hope that it will provide an adequate legislative framework for the entire gamut of micro-finance services."
Reportedly, the Bill seeks to provide more powers to the monetary and banking regulator, Reserve Bank of India, so that it can supervise and control the acts of micro finance companies and can decide the interest rate limits on loans provided by them.
It is to be noted that the bill came into being following the difficulties faced by the customers of the Micro Finance Institutions (MFIs) in the state of Andhra Pradesh. The bill also makes is compulsory for all such MFIs to get registered with the central bank.
On the role to be played by these institutions in the financial inclusion of the country, Chidambaram said, "responsible financing by way of transparency, interest rate rationalisation, respectful recovery procedure to be followed by micro finance institutions" were some of the challenges which this sector has to overcome.