Malegam proposals on MFIs likely to be implemented soon

Only new loans are likely to come under the guidelines-said a banker.

The Reserve Bank of India (RBI) is likely to implement some of the Malegam committee recommendations on microfinance companies from April 1 this year.

The Malegam panel proposals are likely to be implemented from April 1. Only new loans are likely to come under the guidelines, said a banker. Besides,banks are keen on preserving the priority sector status for the microfinance sector,irrespective of the individual conduct of borrowing microfinance institutions.

Bankers main reservation is nothing should happen by which some act or conduct or misconduct of MFIs should result in the priority sector status being withdrawn, an official of the Indian Banks Association said after a meeting between bankers and top RBI officials.

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Even though the Malegam committee has suggested the continuance of priority sector status for loans to the MFI sector,there are some conditions wherein the status can be cancelled due to the misconduct of borrowing MFI like using coercion,charging higher interest rate,etc.

If the MFIs dont do certain things vis-a-vis borrowers,dont penalise me in terms of regulation by taking out sector, he said.

He said that RBI was appreciative of the reservations expressed by the bankers. Top bankers,including Corporation Banks CMD Ramnath Pradeep,HDFC Banks MD Aditya Puri,Axis Bank CEO Shikha Sharma met RBI deputy governor K C Chakrabarty to voice their concerns regarding Malegam Committee recommendations on MFIs before they are ratified into guidelines on April 1.

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