India needs a specialised regulatory authority for microfinance: Muhammad Yunus

India needs a specialised regulatory authority for microfinance: Muhammad Yunus: Q



My VIEW:



M
G Warrier
2005/1-D,
DREAMS
LBS
Marg, Bhandup (West)
Mumbai-400078
(+919349319479)
To
The
Editor
Business
Standard

February
10, 2016
Regulator
for MFIs
Apropos the report “India
needs a specialised regulatory authority for microfinance” (Business Standard, February 10), perhaps Muhammad Yunus has made the observation in the context of his experience in Bangladesh and elsewhere. If he is referring to the need to bring MFIs into the
mainstream banking business, as acknowledged by him the present
effort from RBI is to issue banking licenses to willing MFIs which can conform
to the banking discipline. A beginning has been made in 2015.
In the Indian context, it
would be ideal to allow RBI to remain the regulatory authority for all segments
engaged in the business of banking, like commercial banks, cooperative banks,
RRBs, payment banks, small banks including those MFIs/NBFCs which get converted
into banks after obtaining licenses from RBI. Reserve Bank of India, on its
part will have to recognise the special needs of various categories of banks
and apply tailor-made regulatory requirements for different types of banks.
This approach is already there in the RBI’s regulatory and supervisory
practices in respect of commercial banks, cooperatives and RRBs.
After setting up of
NABARD, the central bank has been sharing certain responsibilities relating to
supervision of cooperative banks and RRBs with that institution. Perhaps a
similar arrangement may be feasible in respect of small banks which comes into
being by conversion of MFIs. Smaller MFIs willing to come to the mainstream banking
business should be encouraged to merge with existing or new banks.


M
G Warrier,
Mumbai

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