By suggesting a cap on interest rates on microloans and annual income of poor borrowers, a Reserve Bank of India (RBI) panel on microfinance led by noted chartered accountant Y.H. Malegam has ruffled many feathers. In an interview, Malegam defended the recommendations, saying the panel’s mandate was to protect poor borrowers and not microfinance institutions (MFIs). Look at the philosophy behind it and not the numbers, and the annual income limit can be different in rural and urban India, he said.
Describing MFIs as “greedy”, he said they book enough profits and could use part of it to reduce rates, which he strongly emphasized should not exceed 24%. If RBI accepts the recommendations, there will be no need for the recent Andhra Pradesh law for regulating MFIs, he said.
READ THE COMPLETE INTERVIEW ON LIVEMINT AT THE LINK BELOW.
Interview with Y. H Malegam – Livemint
Interview conducted by Tamal Bandyopadhyay & Dinesh Unnikrishnan.
