tag:blogger.com,1999:blog-7182576430045656062.post6534646270128071358..comments2024-02-25T13:47:07.003+05:30Comments on Candid Unheard Voice of Indian Microfinance: Why Banking is Not Treated as Usury and How RBI Can (in Legal Sense) Ensure that Micro-Finance is Also Not Treated As Usury in India?Ramesh S Arunachalamhttp://www.blogger.com/profile/09264606020720529040noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-7182576430045656062.post-4683723258832321522011-01-01T12:28:08.679+05:302011-01-01T12:28:08.679+05:30Dear Tarun,
Your question is absolutely rig...Dear Tarun,<br /> <br />Your question is absolutely right that there has to have an authority for regulating MFIs so that quality of credit maintained, whether RBI or NABARD. <br /><br />According to the "Mohammad Yunus" founder of Grameen Banks said " The government should not be running the micro credit programmes. They should be run by other people,"<br /><br />The reason why I say government should not be lending money directly to the borrowers is that the moment they do that, politics gets involved into it and whole the process will get corrupted.<br /><br />Therefore. Government need to have an well organised committee or say intermediary who will take care of all the activities of the MFI so that easy source of funding can be provided to the MFI and usury can be reduced.<br /><br />Thanks & Regards<br />Mayank DarogaUnknownhttps://www.blogger.com/profile/07051865043637716883noreply@blogger.comtag:blogger.com,1999:blog-7182576430045656062.post-19037599947930681442010-12-03T00:38:01.551+05:302010-12-03T00:38:01.551+05:30Dear Sir,
Let's face the fact, MFIs came in w...Dear Sir,<br /><br />Let's face the fact, MFIs came in where the banks failed to do what was required by them to do, to provide credit, without using the heavy handed techniques of local money lender. However, with the passage of time, roles have reversed and that is where the root of this current problem lies.<br /><br />After some searching, I feel, this phenomenon is not common to India alone, across the developing world, MFIs have gone bigger and tapped the market, and that too without any proper regulation. <br /><br />I believe that the Indian regulator, whoever might it be whether RBI or NABARD, must take into view what happened around the world and come into some conclusion. The sector needs to be regulated, that is without any question. But how? that is what I feel is the question.<br /><br />Thanks & Regards<br /><br />TarunTarun Mitrahttps://www.blogger.com/profile/07121533974931375556noreply@blogger.comtag:blogger.com,1999:blog-7182576430045656062.post-70699669190478017682010-12-02T15:52:51.290+05:302010-12-02T15:52:51.290+05:30Dear Mr Vasu and Dear Mr Souren
On further thing...Dear Mr Vasu and Dear Mr Souren <br /><br />On further thing, I feel that much of the problems in micro-finance have occurred because of the hands-off approach followed by regulation and it is time, we call it banking and appropriately supervise micro-finance with the correct incentives. Leaving it as an orphaned child, as has been done so far, is surely a receipe for disaster. Thanks and you will understand what I am saying after I post exclusively on this. Thanks<br /><br />Warm Regards<br /><br />RameshRamesh S Arunachalamhttps://www.blogger.com/profile/09264606020720529040noreply@blogger.comtag:blogger.com,1999:blog-7182576430045656062.post-21736699852656428352010-12-02T13:44:04.725+05:302010-12-02T13:44:04.725+05:30Dear Mr Vasudevan
All I meant is said clearly
...Dear Mr Vasudevan <br /><br />All I meant is said clearly <br /><br /> "hope the relevant authorities examine this matter and take suitable action to help safeguard micro-finance from the usury laws"<br /><br />As noted to Dr Souren above, <br /><br />You point is well taken and I think we need to incentivise registration of mFI under a new regulatory framework, give them access to Priority sector funds and other benefits etc if they do so. Those who register will have need to have minimum standards of Governance, systems, etc and also have a dividend cap. Please see my earlier post in this regard - http://microfinance-in-india.blogspot.com/search/label/State%20of%20the%20Sector <br /><br />Also, my post today was on a legal aspect of why banking is outside the usury act and how the same can possibly happen with MF. <br /><br />This is what you also say<br /><br />Thanks<br /><br />Warm Regards<br /><br />RameshRamesh S Arunachalamhttps://www.blogger.com/profile/09264606020720529040noreply@blogger.comtag:blogger.com,1999:blog-7182576430045656062.post-25302259788538676432010-12-02T13:18:04.694+05:302010-12-02T13:18:04.694+05:30hi Ramesh, this is an interesting thought. howeve...hi Ramesh, this is an interesting thought. however to give the status of 'banking' to micro finance in today's circumstance seems downright wrong ... and i am a MFI practitioner!!!<br />we have many scams in banking too and there are any number of examples of banks flouting all kind of norms and taking customers for a ride. the stories of banks especially the private sector banks, fleecing account holders in the name of charges for non-maintenance of minimum balance in their savings account is legion. and the treatment customers get on thier credit card dealings and the kind of usurious interest rate and various hiddne charges they charge on credit cards is known to all. but inspite of all this, there is still some modicum of governance at the banks and RBI has a much closer supervision including controlling their growth and branch expansions. <br />however MFIs are very loosely regulated on the asset side and supervision is low and the current events clearly establish that governance at MFIs couldnt have been worse. under the circumstance trying to enhance the profile of MFIs seems out of place. <br />however as u suggest once we have a central legislation for MFIs and they come under close field level supervision on their business side, then yes, i think it is right time that MFIs be treated as Banks for the purpose of usury laws. ideally the new legislation which is being promised should include this also<br />regards/vasuvasudevanpnhttp://www.equitas.innoreply@blogger.comtag:blogger.com,1999:blog-7182576430045656062.post-69045505844351255182010-12-02T11:45:53.609+05:302010-12-02T11:45:53.609+05:30Dear Sir,
You point is well taken and I think we...Dear Sir, <br /><br />You point is well taken and I think we need to incentivise this by registration of mFI under a new regulatory framework, access to Priority sector funds and other benefits etc. Those who register will have need to have minimum standards of Governance, systems, etc and also have a dividend cap. Please see my earlier post in this regard - http://microfinance-in-india.blogspot.com/search/label/State%20of%20the%20Sector <br /><br />Also, my post was on a legal aspect of why banking is outside the usury act and how the same can happen with MF. <br /><br />Thanks<br /><br />Warm Regards<br /><br />RameshRamesh S Arunachalamhttps://www.blogger.com/profile/09264606020720529040noreply@blogger.comtag:blogger.com,1999:blog-7182576430045656062.post-19181293775894734332010-12-02T11:20:18.058+05:302010-12-02T11:20:18.058+05:30If MFIs are considered as within the realm of bank...If MFIs are considered as within the realm of banking and allowed to charge usurious rate of interest in that case money lenders would also claim to belong to this category and Usurious Act would become irrelevant.<br />Dr.S.N.Ghosalsourenhttps://www.blogger.com/profile/07687345225285668161noreply@blogger.com