Keya Sarkar: Modes of micro-finance spending

Keya Sarkar: Modes of micro-finance spending
Keya Sarkar / New Delhi December 26, 2007

Despite a focus on the growth of micro-finance companies and a committee set up to find ways to regulate them, the relationship between micro-finance companies and the central bank has at best been one of distant truce. So it was indeed a red-letter day for the Kolkata-headquartered, micro-finance company, Bandhan, and in fact, for the micro-finance industry, when RBI Deputy Governor Usha Thorat, along with officials from the Rural Planning and Credit Department, visited the Bandhan headquarters earlier this month.

Almost all bankers to Bandhan - ABN Amro, Axis Bank, Standard Chartered, SBI and SIDBI - were present at the time the deputy governor made her visit, thereby underscoring the importance of such a visit. Since a lot of RBI policy making for micro-finance companies has been till now influenced by its stronger and closer relationship with commercial banks, it is a great step forward to have a high-level RBI official actually meet the beneficiaries.

This direct interaction would certainly enhance the RBI