MFIs should be given micro credit banking licence: Yunus

Micro finance institutions (MFI) in India need to be given special micro credit banking licence enabling them to raise deposits for the lending requirements, Nobel Laureate and father of micro credit concept Muhammad Yunus said today.
Yunus, an economist and founder of the Grameen Bank in Bangladesh, while appreciating the work done by MFIs in India cautioned them from tapping capital markets for funds.
"MFI should be allowed to take deposits. May be we need a little change in the legal system. So that MFIs can become micro credit banks and can take deposits and lend money, they don't have to go to the market.

"MFIs could be given special micro credit banking license so that you would come under regulations," Yunus told reporters on the sidelines of an event here.
Barring the problems that the industry is faced with in Andhra Pradesh (and Telangana), the MFI sector is doing well in the country, he said.
He said some MFIs in Andhra Pradesh tried to make profit rather than concentrating helping poor with micro lending.

"They (MFIs in India) are doing very well. There were some problems in Andhra Pradesh. But I hope that they will come in right direction. Basically what we say is social business is to help people rather than make money for themselves. But some people tried to make money. That's what created the problem," he added.

He said that government should not get into lending business with a purpose to help poor as the process will eventually be politicised.
"Government should become a cheer leader, because government cannot run micro credit programmes as it gets mixed with politics. It deviates from the whole principle of financial discipline," he added.
Replying to query if Grameen Bank has plans to work in India, he said it has no intension of starting operations in India.
He however, said they might contemplate if there is an invitation.