Due to opposition from the finance committee the Union Cabinet has deferred the Insurance bill which mainly relates to increase in the FDI from 26% to 49%. However the Cabinet has approved the MFI bill which makes RBI the sole regulator for MFIs.
Further the bill will override existing state legislations on MFIs, such as the one passed in late 2010 by the Andhra Pradesh government. This is positive for SKS micro finance and other unlisted MFIs. The key provisions of the MFI bill are under:
All functioning MFIs will have to register with the RBI. All systemically important MFIs will be required to register under the Companies Act.
RBI will also decide interest rates that MFIs can charge.
A Micro-Finance Development Council will be set up to advise the government on formulation of policies, schemes and other measures required in the interest of orderly growth and development of the sector with a view to promote financial inclusion
The RBI may pass an order directing a micro finance institution to cease and desist from carrying out micro finance activities if it is found acting in manner prejudicial to the interest of its clients or depositors.
The Reserve Bank will cancel the certificate of registration granted to a micro-finance institution if it fails to comply with the directives or conditions, the draft Bill states.
....more info
Further the bill will override existing state legislations on MFIs, such as the one passed in late 2010 by the Andhra Pradesh government. This is positive for SKS micro finance and other unlisted MFIs. The key provisions of the MFI bill are under:
All functioning MFIs will have to register with the RBI. All systemically important MFIs will be required to register under the Companies Act.
RBI will also decide interest rates that MFIs can charge.
A Micro-Finance Development Council will be set up to advise the government on formulation of policies, schemes and other measures required in the interest of orderly growth and development of the sector with a view to promote financial inclusion
The RBI may pass an order directing a micro finance institution to cease and desist from carrying out micro finance activities if it is found acting in manner prejudicial to the interest of its clients or depositors.
The Reserve Bank will cancel the certificate of registration granted to a micro-finance institution if it fails to comply with the directives or conditions, the draft Bill states.
....more info