Info Change India

Livelihoods

Thu07202017

Last updateThu, 15 Jun 2017 11am

You are here: Home | Livelihoods | Livelihoods | Microfinance | MFIs must have their own code of ethics

MFIs must have their own code of ethics

Finance Minister Pranab Mukherjee hints that the government does not intend to regulate interest rates in the microfinance sector, but that state governments were well within their rights to regulate lending practices

Finance Minister Pranab Mukherjee has said microfinance lenders must develop a code of conduct regarding interest rates and prohibit coercive recovery methods, clearly hinting that the government does not intend to regulate interest rates in the sector.

“Microfinance institutions (MFIs) should have a code of conduct to ensure interest rates are not high, and coercive methods of recovery are not applied,” Mukherjee said at an annual economic editors conference.

The minister added that the government was in talks with NABARD and the RBI. He said state governments were well within their rights to regulate lending practices.

Mukherjee said the Centre was also in talks with the Andhra Pradesh government, which recently enacted an ordinance to govern microfinance institutions after reports of a series of suicides by indebted farmers. The industry has deemed the provision harsh and has sought relief from the courts.

“I have asked the state government to make some corrections to see certain harsh provisions are removed,” he said. The finance minister said MFIs should follow certain prudent banking practices and lend only to those with the capacity to pay back loans.

Source: The Economic Times, October 27, 2010
            DNA, October 27, 2010