Press Information Bureau

Government of India

Ministry of Finance

11-May-2012 17:55 IST

National Policy on Microfinance

Planning Commission had constituted a High Level Committee on financial sector reforms under the Chairmanship of Shri Raghuram G. Rajan, Professor, Graduate School of Business, University of Chicago in August, 2007. The Committee submitted the report in September, 2008.

The Committee observed that, “despite its success, the future growth of microfinance is constrained by a number of factors. An important issue is the ability of MFIs to raise financing. Given the large estimated demand for microcredit, MFIs need multiple sources of financing, apart from the traditional loan financing from banks. Other constraints include an unclear regulatory environment and the lack of well-developed management information systems and an adequate supply of trained management talent to facilitate sustainable scaling up.”

To provide a formal statutory framework for the promotion, development, regulation and orderly growth of the micro finance sector and thereby to facilitate universal access to integrated financial services for the unbanked population, the Department of Financial Services is formulating Micro Finance Institutions (Development and Regulation) Bill 2012.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in the Lok Sabha today.

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DSM/SS/SL

Microfinance regulation: new Bill proposed to establish statutory framework to promote and regulate microfinance and expand access. The Department of Financial Services is formulating the Micro Finance Institutions (Development and Regulation) Bill 2012 to provide a formal statutory framework to promote, develop, regulate and orderly grow the microfinance sector and thereby facilitate universal access to integrated financial services for the unbanked population, in response to constraints on MFIs including limited financing sources, an unclear regulatory environment, weak management information systems and insufficient trained management talent.