MUMBAI, OCT 18: National Bank for Agriculture and Rural Development (Nabard) has recommended that microfinance institutions should be registered with a suitable regional or national authority. The report submitted to RBI governor on Monday by the task force on supportive policy and regulatory framework for microfinance also recommended main streaming of the institutions and their effective regulation and capacity building.The 15-member task force was formed by Nabard under its managing director YC Nanda to suggest a national policy framework for development of the microfinance sector and to arrive at a conceptual policy framework for its regulation, financing, capacity building and inter-institutional coordination."MicroFinance (MF) is the provision of thrift, credit and other financial services and products of very small amounts by the MicroFinance institutions (MFIs) to the poor in rural, semi-urban or urban areas. However, a large number of the hardcore and asset less poor continue to remain outsidethe fold of the formal banking system," the report said.Requirements of micro credit are expected to be much more than Rs 15,000 crore per year. As against these estimates, bank advances to weaker section aggregated Rs 9,700 crore during 1997-98, while MFIs and SHGs are estimated to have provided about Rs 137 crore, suggesting a vast unmet gap in the provisions of financial services to the poor.It recommended the promotion of Self-Regulatory Organisations (SROs) to regulate functioning of MFIs and evolve systems for maintenance of accounts.
