The government today tabled the Small Industries Development Bank of India (Amendment) Bill, 2012, in the Lok Sabha, allowing sectors including floriculture, tourism, restaurants, and the entertainment industry to access loans from the bank.
The Micro Finance Institutions (Development and Regulation) Bill, 2012, also introduced in the Lok Sabha, aims to bring microfinance-lenders under the regulatory ambit of Reserve Bank of India (RBI), which will be empowered to specify the maximum limit of the margin and the interest rate that can be charged by any MFI. The Banking Laws (Amendment) Bill, 2011, which was scheduled for consideration in the Lok Sabha today, was, however, not taken up for discussion.
According to the SIDBI (Amendment) Bill, tabled by Finance Minister Pranab Mukherjee on Tuesday, SIDBI has been empowered to confiscate the mortgaged property or right to transfer by way of lease or sale in case enterprise makes a default in repayment of any loan or advances. The bill envisages not only widening of the scope of industrial concerns, it also aims at conferring more powers upon the board of directors of bank to decide investment limit for these industrial concerns.
According to the statement of objectives and reasons of the bill, an amendment will replace definition and expression of “industrial concern in small sector” with “industrial concern or micro enterprise or small enterprise or medium enterprise” in the SIDBI Act 1989. Further, the board of directors may unanimously resolve to decide the investment limit for the “purpose of industrial concern”.
By the change in definition, businesses such as convention centres, travel and transport, tourist service agencies, guidance and counselling services to tourists, financial assistance by way of venture capital, risk capital factoring and discounting , construction and development of roads will now be able to take loans and advances from the bank.
The Micro Finance Institutions (Development and Regulation) Bill provides for regulation of activities like micro credit, thrift, pension or insurance services and remittance of funds by micro finance institutions (MFIs). The bill, which was drafted in the backdrop of problems faced by borrowers of MFIs in Andhra Pradesh and other states, seeks for compulsory registration of MFIs with the RBI. They should have a minimum net-owned funds of Rs 5 lakh.
According to the Bill, all MFIs will now have to get registered with the RBI. The Bill introduced today comes with modifications to the earlier Bill introduced in March