Apprehension in UPA on Micro-Fin Bill

NEW DELHI: Minister of State for Commerce Jairam Ramesh has expressed some apprehensions on the Micro Finance Bill pending before a standing committee that seeks to put restrictions on the small lending institutions.

"I have expressed my reservation on the Bill, which has been referred to the Standing Committee on Finance, on the ground it may not be a balanced law," Ramesh said in his interaction with Self Help Groups (SHGs) under the aegis of Society for Promotion of Wastelands Development.

He said there were lacunae in the Bill and it did not give role to markets, which could regulate the sector.

According to estimates, there are over 800 Micro Finance Institutions operating in India in various forms - trusts, societies, cooperatives and Non Banking Finance Companies.

The Bill, which was introduced by Finance Minister P Chidambaram, seeks to control small micro-credit institutions through the National Bank for Agriculture and Rural Development (Nabard) requiring them to meet stringent accounting standards.

Ramesh also criticised attempts to take away freedom given to the self help groups and cooperative societies under the Mutually Aided Cooperatives Societies Act (MACS), which was introduced in Andhra Pradesh by Telugu Desam founder and former Chief Minister N T Rama Rao.

He expressed satisfaction that such attempts have been foiled by the Andhra Pradesh High Court. Over 29,000 village organisations affiliated to different federations are registered under the Act.

"The MACS is a great institution for it eliminates both political and bureaucratic control over cooperatives," he said. Earlier in his address, he said though self help groups were doing a good job but they cannot take over the role to be played by the governments.