Muhammad Yunus wants India to grant special bank licences to microfinance institutions

HYDERABAD: Nobel laureate and Bangladesh’s Grameen Bank founder Muhammad Yunus wants the Indian government to consider granting special micro credit banking licences to microfinance institutions (MFIs) to help them raise funds.

Talking to reporters in Hyderabad on Wednesday on the sidelines of a conference, he said such a licence helps MFIs to come under banking regulations and help the regulator have effective supervision.

He said the licences would help MFIs raise deposits and avoid going public through IPOs for raising growth capital and getting into the trap of looking for undue profits to please the investors.

Appreciating the Indian MFIs for their contribution to the society, Yunus said the government should act as a cheer leader to help the microcredit industry grow and help the poorer sections of the society.

Doubting the efficiency of government in taking up microfinance, he said, "The government cannot run microcredit programmes, because that is very bad thing to do. Then the microcredit and politics get mixed up. It deviates from the whole principle of financial discipline."