Assocham for raising MFIs’ minimum capital needs

HYDERABAD: The Associated Chambers of Commerce and Industry of India (Assocham) on Wednesday called for raising the minimum capital requirement for micro finance institutions (MFIs) to at least Rs 25 lakh, from the Rs 5 lakh proposed in the draft Micro Finance Institutions (Development and regulation) Bill, 2011.
Speaking about its recommendations on the MFI Bill, senior Assocham officials told media persons on Wednesday that this move would help discourage weaker and smaller players as the “product model with capped annual percentage rate (APR) and margin proposed do not support viability unless funds are made available at affordable costs”.Assocham has already submitted its suggestions to the Union ministry of finance last month and hopes that the authorities consider them before passing the crucial bill in Parliament.
Assocham’s recommendations also include spelling out minimum benchmarks for healthy growth of MFIs and increased inflow of funds from banks, laying down a uniform structure for lending and conduct that would be applicable across India and delegating powers to independent agencies such as Nabard (National Bank for Agriculture and Rural Development).
“This will help Nabard, which has sufficient knowledge and understanding of the development needs of MFIs, to supervise a number of small NGOs spread across the country. The large NBFCs (non-banking financial companies) will continue to be directly under the RBI scanner,” said D S Rawat, general secretary, Assocham. Also present at the event was Jyotirmoy Jain, senior advisor and head, banking and finance division, Assocham.