'Cap interest rate margins of MFIs'

HYDERABAD: After suggesting that MFIs should change ‘flawed’ business model, C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, said the microlenders’ interest rate margins should be capped.
“I suppose one approach is to fix the margins of MFIs so that the margin they enjoy is not really too high. The margin should be adequate to cover the transaction cost and the risk element,” he told media persons.While refusing to specify the figure for such a cap, he said “that (number) depends on the rate at which they borrow and the rate at which they lend”.