Centre may fix micro fin interest rates
The government is planning to prescribe broad interest rate bands for micro finance institutions (MFIs) and self-help groups.
By TNN |
NEW DELHI: The government is planning to prescribe broad interest rate bands for micro finance institutions (MFIs) and self-help groups.
Details of the proposed legislation on MFIs and self-help groups were discussed by a group of ministers (GoM) headed by agriculture minister Sharad Pawar here on Monday. The bill on micro finance is expected to be tabled in Parliament during the forthcoming Budget session.
The government would spell out accountancy norms that MFIs should follow, sources said. MFIs have justified higher interest rates, saying it was not possible to keep transaction costs low for the system to be sustainable. The government was, therefore, against imposing a cap on rates charged by MFIs as it would create artificial scarcity.
MFIs want the government to empower them to mobilise savings accounts by providing enabling guidelines through the legislation. However, RBI has expressed reservations about the efficacy of MFIs in handling public money since it could put the interests of the depositors in jeopardy.
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