Regulatory Initiatives
Five most important policy prescription by Reserve Bank for promoting MFIs need to be recognised:
1 Banks have been advised that financing of SHGs should be included by them as part of their lending to the weaker sections and that SHG lending should be reviewed at the SLBC level and by the banks at regular intervals.
2 To further promote the Self Help Group momentum in the country, banks were advised in 1998 that SHGs which are engaged in promoting the savings habits among their members will be eligible to open savings bank accounts and that such SHGs need not necessarily have availed of credit facilities from banks before opening savings bank accounts.
3 Subsequent to the Monetary and Credit Policy announcement for the year 1999-2000, banks were also advised that interest rates applicable to loans given by banks to micro credit organizations or by the micro credit organizations to SHGs/ member beneficiaries will be left to their discretion.
4 In January, 2000 all NBFCs and RNBCs were advised that those NBFCs which are engaged in microfinancing activities, licensed under Section 25 of the Companies Act, 1956, and which are not accepting public deposits are exempted from the purview of Sections 45-IA (registration), 45-IB (maintenance of liquid assets) and 45-IC (transfer of a portion of profits to Reserve Fund) of RBI Act, 1934.
5 In view of the need to protect the interests of depositors, MFIs would not be permitted to accept public deposits unless they comply with the extant regulatory framework of the Reserve Bank. However, as an additional channel for resource mobilization for them, the Reserve Bank, in April 2005 has enabled NGOs engaged in microfinance activities to access the ECBs up to US$ 5 million during a financial year for permitted end-use, under automatic route.
1 Banks have been advised that financing of SHGs should be included by them as part of their lending to the weaker sections and that SHG lending should be reviewed at the SLBC level and by the banks at regular intervals.
2 To further promote the Self Help Group momentum in the country, banks were advised in 1998 that SHGs which are engaged in promoting the savings habits among their members will be eligible to open savings bank accounts and that such SHGs need not necessarily have availed of credit facilities from banks before opening savings bank accounts.
3 Subsequent to the Monetary and Credit Policy announcement for the year 1999-2000, banks were also advised that interest rates applicable to loans given by banks to micro credit organizations or by the micro credit organizations to SHGs/ member beneficiaries will be left to their discretion.
4 In January, 2000 all NBFCs and RNBCs were advised that those NBFCs which are engaged in microfinancing activities, licensed under Section 25 of the Companies Act, 1956, and which are not accepting public deposits are exempted from the purview of Sections 45-IA (registration), 45-IB (maintenance of liquid assets) and 45-IC (transfer of a portion of profits to Reserve Fund) of RBI Act, 1934.
5 In view of the need to protect the interests of depositors, MFIs would not be permitted to accept public deposits unless they comply with the extant regulatory framework of the Reserve Bank. However, as an additional channel for resource mobilization for them, the Reserve Bank, in April 2005 has enabled NGOs engaged in microfinance activities to access the ECBs up to US$ 5 million during a financial year for permitted end-use, under automatic route.
posted by Anand at 11:26 PM
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