Letters: Micro-reforms

With reference to your editorial “Back on the rails” (May 11) the new microfinance rules framed by the Reserve Bank of India are certainly a good step towards bolstering the system. But there are many concerns for the rails of micro-finance in India to run smoothly and become “win-win” for all stakeholders. First, something should be done to increase awareness regarding microfinance opportunities and develop a culture of repaying loans on time. Second, it is timely and adequate microfinance that is important for the people who need it and this should be facilitated. Third, keeping the repayment period within a year is not enough to stop finance being diverted to consumption. An optimum mechanism should be developed to monitor the end-use of microfinance. Allowing a repayment period of two years is reasonable and would be useful for the people who need it.

Raman Kumar Agrawalla, Bhubaneswar

Readers should write to:
The Editor, Business Standard, Nehru House,
4, Bahadur Shah Zafar Marg, New Delhi 110 002,
Fax: (011) 23720201; letters@bsmail.in