The Centre has been asked to come clear on the issue of regulation and supervision of micro-finance institutions (MFIs).
The locus standi of the Reserve Bank of India with respect to MFIs is not yet clear, says Samir Ghosh, General-Secretary, All-India Reserve Bank Employees’ Association.
"At least the RBI workforce is not aware," he said in a letter to Anjuli Chibb Duggal, Secretary, Department of Financial Services, under the Ministry of Finance.
A statement from Duggal had quoted her as saying recently that the ‘RBI is already the regulator for non-finance banking companies and MFIs,’ he recalled.
Media reports had also suggested that the Centre had sought to institutionalise MUDRA Bank as not just the financier but also the regulator of the MFIs, he recalled.
But MUDRA Bank, being both financier and regulator of MFIs, will definitely cause a conflict of interest, Ghosh said.
MALEGAM PANEL
Regulation and supervision of MFIs has been a topic under discussion in several quarters for quite some time.
It was after several instances of malfeasance in MFIs in the then state of Andhra Pradesh came to light and became a subject matter of public debate a few years back that the idea of their regulation by the RBI was mooted.
A committee under the chairmanship of YH Malegam, veteran member of the RBI central board, was set up to look into the issue.
The committee also recommended that RBI, because of its expertise in the financial area, should regulate and supervise the MFIs. But the matter had not progressed further, Ghosh said.
NO CONFIRMATION
There is no confirmation yet that the RBI is ‘already’ the regulator of the MFIs, as Duggal seems to have stated.
“If the Centre has decided in favour of RBI regulating the MFIs, as you seem to have averred, we shall indeed be happy,” Ghosh wrote to Duggal.
He recalled that he had written to Pranab Mukherjee, then Minister of Finance and now President, soliciting that RBI be entrusted with the job of regulation and supervision of MFIs. The RBI workforce was ready to undertake the work to everybody’s satisfaction, he added.
He requested Duggal to clarify the position and advise RBI suitably to set up and operationalise without delay the machinery for performing this ‘sensitive job.’