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(From left) Ms Ranjana Kumar , Chairperson , Nabard; Dr C . Rangarajan, Chairman, Economic Advisory Council to the Prime Minister; and Mr Y.S.P. Thorat , MD, Nabard, at a conference on microfinance in the Capital on Tuesday. — Kamal Narang

New Delhi , May 3

THE Government is finalising the draft of a new legislation on microfinance institutions (MFIs). The draft is expected to be ready within the next few months.

"The Government is thinking of a legislation on micro finance institutions that would provide credibility to these bodies. We hope to have the draft ready within two months," Mr Vinod Rai, Additional Secretary, Finance Ministry, said on Tuesday while speaking at a Nabard conference on micro finance.

Mr Rai said that the proposed legislation would not aim to curb the basic tenets of micro finance while providing legal sanctity to MFIs.

"Time has come for regulations for these institutions to ensure they do not lose credibility after becoming large bodies," he said.

The Chairman of the Economic Advisory Council to the Prime Minister, Dr C. Rangarajan, felt that to begin with there should be some guidelines for the sector.

He said that at first attempts should be made to come up with self-regulatory organisations instead of directly going for a regulator.

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