Saturday, October 30, 2010

MFIs and Regulation

I have been raising the concerns about the high rates of interest being charged by the Microfinance Institutions in my blogs.  The scenario in AP is causing damage to the Financial Inclusion and Rural Credit (especially to poor, illiterate women in India).  While all the good work being carried out by the PSBs is under scrutiny and working of the NBFCs have been streamlined for over a decade, a new issue cropped up in recent years that of MFIs.

Today's Business Line reveals the high rates (as much as 65% pa) being charged by AP based MFIs and interestingly Economic Times article is in favour of high rates.  We need to wait and see what the Sub-Committee constituted by RBI is going to recommend even when AP Govt has gone ahead issuing an Ordinance last week.

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