Govt may bring in fresh legislation on MFIs: Jaitley

The Government has started consultations with all stakeholders, including State Governments, and may bring in a new legislation for regulating micro-finance institutions (MFIs), Finance Minister Arun Jaitley said in the Lok Sabha.

This is because the Micro Finance Institutions Development and Regulation Bill, 2012, which was introduced in the Lok Sabha on May 22, 2012 and was referred to the Standing Committee, which submitted its final report on February 17, 2014, has lapsed.

Replying to a supplementary question, Jaitley said that MFIs, especially the ones run by women self-help groups, were by and large functioning well and recoveries were close to 100 per cent. However, he admitted that there were cases of coercion, as pointed by Trinamool Congress MP, Saugata Roy.

If any MFI is involved in unfair practices, the RBI guidelines are clear on that – there should be transparency in disbursement and recovery, he said.

When Biju Janata Dal MP Bhartruhari Mahtab pointed out that self-regulation by MFIs had failed to prevent cases of suicides in Andhra Pradesh, the Finance Minister admitted of one case such case (SKS Microfinance) but said that the RBI had reported that it had not come across any instance of an institution registered as an NBFC-MFI charging rate of interest beyond the one prescribed by it.

The RBI issued regulatory guidelines for NBFC-MFIs on July 1.