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The Reserve Bank of India should allow NBFC-MFIs to become business correspondents and open savings accounts on behalf of banks.
The central bank should take a forward looking position that promotes national financial inclusion agenda, said Alok Prasad, Chief Executive Officer, Microfinance Institutions Network (MFIN), a self-regulatory organisation.
As many as 46 non-banking finance companies (NBFC-MFIs) whose combined business account for 80 per cent of the Indian microfinance sector comprise the member-organisations of MFIN.
Prasad said that the RBI should get over its historical doubts and suspicions (about NBFCs) and treat them as entities which it regulates and, therefore, full-scale members of the financial system.
He also felt that perceptions of conflict of interest are, perhaps, misplaced.
MFIN demand for allowing NBFC-MFIs to become business correspondents comes close on the heels of the Finance Minister P. Chidambaram’s remarks that financial inclusion architecture is incomplete without microfinance.
On Tuesday, Chidambaram called upon the microfinance sector to work with the Government on financial inclusion and reaching financial services to the poor.
As per the current RBI regulations governing microfinance sector, the NBFC-MFIs cannot open savings accounts on behalf of banks, industry observers said.
Microfinance industry players are hopeful that the Microfinance (development and regulation) Bill will soon get enacted into law.
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