The Hindu Business Line : Micro-finance Bill tabled

The Finance Minister, Mr P. Chidambaram, tabled the Micro Financial Sector (Development and Regulation) Bill 2007, in the Lok Sabha on Tuesday. The Bill makes the National Bank for Agriculture and Rural Development (Nabard) the regulator for the micro-financial sector.

On its enactment, the Bill makes registration of micro-finance organisations with Nabard mandatory and no institution (including existing) can carry out business of offering thrift services without obtaining certificate of registration. For seeking registration, the organisation should have minimum net owned funds of Rs five lakh.

The Bill qualifies any amount not exceeding Rs 50,000 as a micro-finance service, with this limit set at Rs 1.50 lakh for housing purposes. For safeguarding interests of the people depositing their money, the Bill proposes constitution of a reserve fund, where minimum 15 per cent of the net profit or surplus realised out of thrift services will be parked.

The Bill also empowers Nabard to frame a scheme for the appointment of one or more Micro Finance Ombudsmen for settlement of disputes between clients and micro finance institutions.

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