The Microfinance Institutions Network (MFIN) has applied to the Reserve Bank of India to be recognised as the first self-regulatory organisation (SRO) for microfinance institutions.
Besides filing a formal application, the registered body of leading non-banking finance company-microfinance institutions has also completed necessary structural changes in its management.
“We have just inducted three independent directors on the board as it is mandatory for an SRO to have one-third of members as independent directors,” its Chief Executive Officer Alok Prasad told Business Line .
Vimal Bijal, former chief general manager of RBI, Rajat Kathuri, Director and Chief Executive of Delhi-based think-tank, ICRIER, and Sanjay Sinha, head of M-Cril, were taken on the board as independent directors.
“By June, we will have one more independent director and the total strength of the board will be 12, including four independent directors,” Alok Prasad said.
Last year, the RBI had released guidelines on self-regulation by MFIs in accordance with the recommendations of the Malegam panel set up by the apex bank earlier to look into regulatory aspects of micro-lending following the Andhra Pradesh microfinance crisis of 2010.
To be recognised as an SRO, an industry body should have independent directors comprising at least a third of its board, and representation of both small and large micro-lenders on the governing council. It should also have a compliance officer who is employed and paid by the SRO, but is directly responsible to the RBI.
“We have also appointed another expert, Ratna Vishwanathan, as the compliance officer, besides setting up an SRO fund with ₹3 crore. Whatever has to be done according to the norms has been done. Now we will wait for the RBI decision on our application,” he said.
On the state of the industry, he said, loans outside Andhra Pradesh were growing. By March 31, 2014, the gross loan portfolio was expected to cross ₹30,000 crore, registering over 50 per cent growth compared to last year.