Microfinance Institutions Network (MFIN), the apex body of micro-finance companies in India, has called for an early implementation of the Nachiket Mor Committee Report. The report recommends deepening of partnership between banks and MFIs, allowing MFIs to set up specialised/ new category banks (payment banking) among other major recommendations to broaden financial inclusiveness in India.
"Our customers are demanding number of banking services from MFIs. They want services beyond loan offerings, including insurance, invesment opportunities, inter-bank trading services, where banks find it difficult to provide services due to various reasons," said Alok Prasad, chief executive officer (CEO), MFIN.
“An important aspect for early implementation of Nachiket Mor Committee Report is to ensure that around 30 million customers can raise funds at a much cheaper rate than the prevailing interest rates of 24%,” he said. Now, NBFC-MFIs cannot raise deposits from the customers.
“By allowing MFIs to create payment banking/specialised banks under new category, the MFIs can raise deposits as well lend money to customers of joint liability group (JLG) at a higher level as suggested by the Mor committee report. This will also help rotate money raised from them to lend money to more and more poor people across the country thereby achieving financial inclusiveness at a much higher rate," he pointed out.
“We are out of the crisis period. The industry has regained momentum of 2005-10 and expected to end the current fiscal with a growth of 50%, except Andhra Pradesh. The state led to piling up of NPAs worth R7,000 crore out of R25,000 crore industry's business at that of point of time (late 2010-11) through 80 lakh customers. It also saw many MFIs gone bankrupt due to erosion of networth. With RBI's timely intervention and Union government's policy decisions, the industry grew 17% in 2012-13 and expect to end the current fiscal (FY14) with 40% growth to reach R30,000 crore. Except Andhra Pradesh, MFIs are performing better across the country,” Prasad said, adding, “This is despite the fact that the economy is not so robust in the current fiscal.” The climate in Andhra Pradesh has turned negative and unless the state changes law, MFIs will find it difficult to do business there, he added.