Report Summary. Malegam Committee on Microfinance. (January ). Background. The Board of Directors of the Reserve Bank of India. (RBI) constituted a. PDF | On Nov 7, , Saswat Barpanda and others published The Malegam Committee Microfinance Report: Will the MFIs Accept It?. Malegam Committee Report on MFI – Download as PDF File .pdf), Text File .txt) or read online.

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Fifth, the strong emphasis on corporate governance is note worthy and specifically, the committee has suggested that corporate governance rules will have to be specified encompassing several issues for NBFC MFIs by the regulator.

Instant Payday Loans Within 24 Hours. Read a lot of your work and enjoy it Consider expanding the definition of microfinance to include not just micro credit for all purposes but a full suite of financial services. Consider extending banking correspondent model to MFIs – for and non-profits.

Please refer to www. Dear Ramesh, This is a wonderful blog.

Malegam Committee Report on Microfinance: What’s On The Platter?

A second aspect that deserves appreciation is the fact that while the report has recommended continuation of priority sector funds for MFIs, it was however made it conditional – especially after recognizing some of the key problems like ghost lending, multiple lending, over lending and attempting to outline some measure to tackle them as well. I am sure you would recall my posts on that Thanks for sharing this.

This is admittedly a suggestion that perhaps cannot be implemented on the ground. Vijay January 24, at 9: Pragmatism is necessary coupled with better regulation to ensure to craete a win win situation. This has not offered any sort of immunity to MFIs from state control, then what is it that the committee recommends that changes this?

Overall, the Malegam Committee has done a highly commendable job with a very complex problem and that needs to fully recognized and well appreciated.

A very critical aspect indeed…. The committee must also recognize that caps on loan sizes and total loan outstanding may be some what restrictive for the clients and perhaps even at variation with current RBI policy.

Fourth, the report has recognized and stressed the importance of off-site and on-site supervision of NBFC MFIs including systemically important ones while also alluding to mircofinance need for significantly enhancing the supervisory capacity of RBI with mlcrofinance to micro-finance. Knowing your writing style, I think you have been too kind to the committee, perhaps because it may not sound like a good idea to take on a regulator. More importantly, the resultant search for greater efficiencies will surely result in reprot short cuts being taken with regard to client acquisition, client engagement and the like – we all know what problems that all of this caused in AP in the recent past.

That is what Rameshs analysis shows. Should RBI be looking at a special category of Banks for such limited players that too under the current circumstances.

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Drop everything from the report that could stifle competition, threaten the existence of small MFIs, heighten entry barriers, make it difficult to reach remote and difficult terrains, limit borrower choice, limit midrofinance methodology, discourage innovation and those clauses that are impractical to enforce. Similar to SHG-bank linkage program. Dear Sasi Garu Many thanks and I have enjoyed your analysis and responses as welll and I did with the one above Instead of criticizing further let me offer some suggestions the RBI could consider before releasing the regulatory framework: A second aspect is the use of caps for annual family incomerestricting it to Rs.

Bhalchander January 24, at At the cost of repeating some of the things I have the following to say – You microfinaance be aware that despite several requests from the sector till the recent past RBI was reluctant to regulate the sector as they felt it malgeam stifle the growth. Last but not the least, the report pf the committee, while providing a good framework for the future, perhaps does not adequately address the existing crisis situation in AP and slowly beginning to unfold in Tamil Nadu and issues around these — there are miccrofinance large number of clients and JLG who have been shared at the field level, with each MFI reaching out to them, on a specific day of the week.

Your views are highly balanced and enlightening.

That said, I have pointed out several issues that the committee would need to think about seriously and thanks for your views and let me look at them closely and your points are well taken Malegam Committee on Microfinance leaves us with more questions than answers. Unfortunately despite this attempt the State Govt still feels that the RBI report is more to protect MFIs interest than the customers interest, so they want more micro management from RBI than what committes proposed in the Malegam committee report It has shown the right strategic intent and direction for establishing a uniform national regulatory microfonance for micro-finance in India that attempts to put clients first… Ladies and Gentlemen, let us give the committee a Big Warm Hand …rather than JUST nitpicking on specific issues that can perhaps be sorted out through discussion and dialogue… Clearly, it is about time that we – stop being Penny Wise and Pound Foolish and – recognize the huge and legitimate platform for action that the Malegam committee has provided all of us….

Unfortunately oh the Banks and MFis have let it down, this si despite repeated warnings by RBI on various commtitee, however, the going was so good that the MFIs felt that they have become super powers and none can dictate terms to them. This ensures that micro-finance will come under the purview of the RBI and no longer can microfinance be treated as a fringe activity or as an microginance child in the larger Indian financial sector.


Sasi Thanks for your mail and the suggestions. A third issue that merits appreciation is the fact that the report has sought to promote greater transparency with regard to interest rates…through various measures. Thanks Ramesh informative articles. Ramesh – thanks for another good analysis. Work from home without Investment. A third issue that merits appreciation is microfinancce fact committef the report has sought to repirt greater transparency with regard to interest rates…through various measures.

I think it would be unfair to criticize the Malegam committee report on the lack of implementation detail – after all, much of this can be detailed out only after the RBI accepts the various recommendations and I am sure that necessary precautions by the RBI will be taken with regard to codes of conduct, client protection measures, corporate governance etc. But I guess it was committee with no other option. I really think there is a fantastic opportunity which is not getting the required attention.

Eighth, it would also be useful if the committee looks at the aspect of equity investment in MFIs and build necessary safeguards to ensure that what happened in AP does not recur again. Once the initial recommendations are refined and suitably accepted, I would additionally add that the Malegam committee should recommend the creation of an ongoing working sub-group or expert group that continues to be engaged with the sector for several years to come and that creates an ongoing implementable roadmap for delivery of other critical services that reoprt need.

Given that there is such a hue and cry when the MFIs by and large are teport with only a single product not sure if the regulator can afford to take the risk of opening up the savings to them, although the suggestion is a good one.

Ofcourse, the good thing is Malegam Committee has specifically suggested that RBI should come out with a detailed customer protection guidelines, which perhaps would give the state Govt some comfort to withdraw the microfinancee act Looking from a public policy perspective, Malegam committee’s role may not be viewed just in light of current crisis but in strengthening financial inclusion agenda.

Malegam Committee Report – Summary of Key Recommendations

The Malegam committee report must be strongly appreciated because it seeks to legitimize microfinance as an integral part of the Indian financial sector. On the other hand, the income caps committtee mean those loans are made to borrowers whose incomes less afford the higher debt. We have reproduced the same on the India Microfinance website.

Offer special incentives and tax breaks to MFIs seeking to reach underserved areas. Bring all private microfinance players under one ambit, not just NBFCs.