Assocham for raising MFIs' capital norms

The Associated Chambers of Commerce and Industry of India (Assocham) today called for raising the minimum capital requirement for microfinance institutions (MFIs) to at least Rs 25 lakh, as against Rs 5 lakh proposed in the Micro Finance Institutions (Development and Regulation) Bill, 2011.

“It (the requirement) should be raised so that the weaker and smaller players are discouraged. The product model with capped annual percentage rate and the margin proposed do not support viability unless funds are made available at affordable costs,” it said in a release.

It proposed the minimum capital requirement be backed with strong technology intervention for adequate reporting, supervision and regulation. Clarity in definitions of expressions like ‘microfinance’ and ‘profit’ were also sought.

 

“The Reserve Bank of India can delegate regulatory powers with respect to any class of MFIs to an independent agency like Nabard, which has the knowledge and understanding of their development needs,” it said.