Orissa finance minister Prafulla Chandra Ghadai on Tuesday took a dig at the micro finance institutions (MFIs) and said, though these institutions had started as a NGO initiative, they have now turned into money making machines.
“The owners of big MFIs have surpassed Tatas and Birlas in amassing wealth”, said Ghadai at a round table discussion on Microfinance in Orissa-issues and challenges organized by Sa-Dhan, a national level association of community development finance institutions.
He said, the luxurious lifestyle of some of the owners of these micro finance institutions is a reflection their profit making motives.
He urged the MFIs to adhere to the Reserve Bank of India guidelines and not charge exorbitant interest on the loans to the poor as these institutions play an important role for the financial inclusion in the remote areas.
Even as the Centre plans to rein in the MFIs through introduction of Micro Finance (Development and Regulation) Bill, 2011, the state government is mulling to bring a separate state specific bill as all the provisions of the draft bill do not fulfill the requirement of the state.
“I welcome the Central bill, but we will bring a separate bill at the state level as there are many provisions in the Central bill which does not satisfy the state’s interest and we do not agree on them. We are currently examining these provisions”, Ghadai said.
Disputing the Ghadai’s statement, Md. N Amin, Vice President, Sa-Dhan, Orissa Chapter and President of ADHIKAR, a city based MFI said, there is no need of another bill in the state as the new bill will accord a recognition to the MFIs.He said, the state government should rather send their suggestions to the Centre for amendment in the draft bill like it is done by Andhra Pradesh.
The Micro Finance (Development and Regulation) Bill 2011 has been drafted taking all the stakeholders into consideration. The situation in Orissa is not like Andhra Pradesh and the MFIs in the state are more transparent compared to other states. The state government has been provided a major role in the bill, therefore there is no requirement of bringing a separate bill for the state, said Parshuram Nayak, Director, Swayamshree Micro Credit Services, a state based MFI.