Report Summary. Malegam Committee on Microfinance. (January ). Background. The Board of Directors of the Reserve Bank of India. (RBI) constituted a. PDF | On Nov 7, , Saswat Barpanda and others published The Malegam Committee Microfinance Report: Will the MFIs Accept It?. Malegam Committee Report on MFI – Download as PDF File .pdf), Text File .txt) or read online.
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Work From Home 3 Online Jobs that pay you Rs per hour Since time immemorial people have tried to maximize the returns that they get from Looking from a public policy perspective, Malegam committee’s role may not be viewed just in light of current crisis but in strengthening financial inclusion agenda. That said, I have pointed out several issues that the committee would need to think about seriously and thanks for your views and let me look at them closely and your points are well taken This ensures that micro-finance will come under the purview of the RBI and no longer can microfinance be treated as a fringe activity or as an orphaned child in the larger Indian financial sector.
More importantly, the resultant search for greater efficiencies will surely result in more short cuts being taken with regard to client acquisition, client engagement and the like – we all know what problems that all of this caused in AP in the recent past. Dear Ramesh garu, As always I enjoyed reading this thoughtful analysis. Eighth, it would also be useful if the committee looks at the aspect of equity investment in MFIs and build necessary safeguards to ensure that what happened in AP does not recur again.
Fifth, the strong emphasis on corporate governance is note worthy and specifically, the committee has suggested that corporate governance rules will have to be specified encompassing several issues for NBFC MFIs by the regulator. Bhalchander January 24, at At any rate, not treating Sa-dhan as an MFI association will again be perceived as patently unfair and hence, this aspect also needs to be reconsidered…and perhaps changed accordingly I doubt if this changes just by adding a suffix without suggesting necessary amends in state moneylending laws.
Thanks Ramesh informative articles. To clarify, the issue is not one of not wanting to take on the regulator – I have been fairly critical of supervision in Indian MF and also talked of regulatory failure here Bonam Srinivas January 28, at You may be aware that within 2 weeks all the MFIs have submitted the data perhaps this is the only way things would work as we are used to learn the hard way.
Malegam Committee Report on Microfinance: What’s On The Platter?
Work From Home Hence, the committee may consider removal of the capping on overall interest, while continuing to suggest the capping of the margins — but through more appropriate slabs and with greater re;ort to accommodate the diverse nature of Indian micro-finance and MFIs. Sixth, there are several other aspects in the report that require commendation: How to earn Rs in 10 Minutes.
On the other commigtee, the income caps will mean those loans are made to borrowers whose incomes less afford the higher debt. Thanks for sharing this. Also the regulators focus when introducing guidelines would be more to see on handling exceptions, so how do you ensure that the borrower is not becoming a member in multiple groups and threatening the very basic principle of peer pressure on which the model works I agree that the committee provides much needed legitimacy to the sector by emphasizing the need for enhanced regulation.
A very critical aspect indeed…. I don’t understand though what is microfihance the report that would stop state governments from doing what it did in AP again and again. This seems fair from an equity pun intended perspective…. Work From Home Work from home without Investment Everybody dreams of working from home and being your own boss but very few Further, the capping of loan amounts and loan outstanding would severely hurt the clients in the medium and committeee term in their efforts to climb out of poverty.
Consider extending banking correspondent model to MFIs – for and non-profits.
Malegam Committee Report – Summary of Key Recommendations
Sasi January 26, at Once the initial recommendations are refined and suitably accepted, I would additionally add that the Malegam committee should recommend the creation of an ongoing working sub-group or expert group that continues to be engaged with the sector for several years to come and maelgam creates an ongoing implementable roadmap for delivery of other critical services that clients need.
But what I fail to understand is how is this going to help in cases like AP. But the immediate concern for the regulator is to address the customer protection and other issues raised by the Govt. Unfortunately both the Banks and MFis have let it down, this si despite repeated warnings by RBI on various occassions, however, the going was so good that the MFIs felt that they have become super powers and none can dictate terms to them.
For example, there are sometimes 6 MFIs sharing a JLG and its clients and this has been the REAL secret of the micro-finance growth story so far…Add to this the huge levels of indebtedness on the ground and I am not sure that the report provides any way out for these aspects…I hope that the committee and RBI look into and address these issues as otherwise, there would be no REAL way feport.
A second aspect that deserves appreciation is the fact that while the report has recommended continuation of priority sector funds for MFIs, it was however made it conditional – especially after recognizing some of the key problems like ghost lending, multiple lending, over lending and attempting to outline some measure to tackle them as well. But I guess vommittee was left with no committes option. No doubt the report brings out some excellent recommendations that would go a long way in strengthening the sector.
Mallegam once again for all your comments Best Regds Bonam Srinivas. Ofcourse, the good thing is Malegam Committee has specifically suggested that RBI should come out microfinancf a detailed customer protection guidelines, which perhaps would give the state Govt some comfort to withdraw the monsterous act To conclude, I feel once a special category NBFC MFIs is created and the black sheep is weeded out nothing stops RBI from going ahead with your suggestions below which are all a definite need for the long term sustainability of the sector.
The much-awaited Malegam committee report is laudable because it reporf the 1 st committee report of some significance to attempt the creation on of a national regulatory framework for MF in India. While we can separately discuss on the pros and cons of some of the suggestions, I really liked one idea of yours which is the public private partnerships.
Malegam Committee Report – Summary of Key Recommendations
Enable public-private partnerships by linking MFIs with state-run microcredit programs. Newer Post Older Post Home. The Malegam committee report must be strongly appreciated because it seeks to legitimize microfinance as an integral part of the Indian financial sector. Therefore, it would be appropriate if the committee reconsiders this aspect so that all existing small and nascent players — both NBFCs and those NGO MFIs ready and desiring to transform – are not unduly inconvenienced.
Drop everything from the report that could stifle competition, threaten the existence of small MFIs, heighten entry barriers, make it difficult to reach remote and difficult terrains, limit borrower choice, limit lending methodology, discourage innovation and those clauses that are impractical to enforce.
A third issue that merits appreciation is the fact that the report has sought to promote greater transparency with regard to interest rates…through various measures.
At the cost of repeating some of the things I have the following to say – You may be aware that despite several requests from the sector till the recent past RBI was reluctant to regulate the sector as they felt it would stifle the growth. Hence, the committee may want to go with the existing RBI ceiling of Rs 50, for loan size as well as total loan outstanding and back it up by ensuring that MFIs have good loan origination and appraisal systems especially, for large non-consumption loans to individuals, which must also be permitted and appropriate ceilings for consumption loans as already proposed by the committee.
A third issue that merits appreciation is the fact that the report has sought to promote greater transparency with regard to interest rates…through various measures. But I doubt if it has done justice to the industry as a whole.