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The government’s plans to give regulatory status to the MUDRA Bank over all micro-finance institutions (MFI) is likely to get delayed as discussions with stakeholders are still continuing.
Official sources said the proposed Bill may now be introduced in Parliament in next year’s Budget session, not in the Winter Session scheduled for next month.
“Discussions on the proposal are still on with the microfinance institutions and the Reserve Bank of India on its various provisions,” said an official source, adding that the Bill is unlikely to be finalised in time for the Winter Session.
Clarifications soughtMFIs are understood to have sought more discussions with the Finance Ministry on the role of the new regulatory agency and how it would impact their operations.
Under current laws, MFIs that are registered as non-banking financial companies (NBFCs) are regulated by the RBI, while the rest, which are registered as societies, are largely self-regulated.
Announced by Finance Minister Arun Jaitley in Union Budget 2015-16 and formally launched by Prime Minister Narendra Modi in April, the Micro Units Development Refinance Agency (MUDRA) was envisaged as an agency to finance small businesses and boost employment and entrepreneurship in the country.
Additionally, the Finance Ministry also sought to fill in the regulatory gap in the MFI industry by turning MUDRA into a sectoral regulator, monitoring both kinds of MFIs — those that are registered as NBFCs and those that are classified as societies.
“MUDRA Bank would be responsible for regulating and refinancing all MFIs which are in the business of lending to micro and small business entities engaged in manufacturing, trading and services activities, among others,” the Ministry had said in an official statement.
Officials had indicated at the time that a Bill for statutory status to the Bank would be tabled in Parliament by the end of the current year.
An earlier Bill to set up a regulator for MFIs was rejected by the Parliamentary Standing Committee on Finance, which had called for wider discussions on the proposed Micro-finance Institutions (Development and Regulation) Bill, 2012.
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