Parliamentary panel rejects Micro Finance Bill

NEW DELHI: A Parliamentary panel today rejected the bill on micro finance institutions which sought to empower the Reserve Bank to regulate them and fix interest rates ceiling on loans to be provided by MFIs.

The decision to return the bill to the Parliament was taken by the Parliamentary Standing Committee on Finance headed by senior BJP leader and former finance minister Yashwant Sinha here at its meeting.

"We have returned the Micro Finance Institutions (Development and Regulation) Bill, 2012. We have not approved it," a member of the committee said after the meeting.

The committee was not in favour of the draft legislation to regulate MFIs and will soon submit its report on the bill to the Parliament, he added.

The bill was introduced in the Lok Sabha in May, 2012 and was later referred to the committee for perusal.

"Since this is the last session of the 15th Lok Sabha, the bill is most likely to be lapsed with dissolution of House as general elections are around the corner," the member said.

As per the practice, all pending bills in the Lok Sabha lapse with the dissolution of the House. These bills would have to be reintroduced by the new government.

The bill, which was drafted against the backdrop of problems faced by borrowers of MFIs in Andhra Pradesh and other states, provides for compulsory registration of MFIs with the RBI.

The micro finance business, which entails doling out small loans at high interest rates to those who do not have access conventional lending institutions, has come under intense regulatory scrutiny in the wake of an Act passed by the Andhra Pradesh Government.

Meanwhile, the committee also adopted its draft report on the Competition (Amendment) Bill, 2012 that requires the Competition Commission of India (CCI) to decide on corporate mergers within 180 days.

The committee has however opposed the provision of the bill that provides search and seizure powers to the CCI Director General (DG) for investigations.

"We have also adopted the draft report on the Competition (Amendment) Bill, 2012. It will soon be submitted to the Parliament," he added.

The bill was introduced in the Lok Sabha in December 2012 and was referred to the committee for scrutiny.