By S. L. Jerauld and P.Inbaraj, Microfinance Practitioners from Tamil Nadu.
We believe that microfinance institutions should be regulated in Andhra Pradesh and the following regulations should be considered by the RBI and government.
Our Recommendations for Microfinance Sector
1) For obtaining NBFC License for Microfinance operations, the Government should ensure that the concerned NBFCs have at least 75% stakeholders from the microfinance community (MFI Clients ).
2) NABARD, RBI, and lending banks must give orientation, and training to NBFCs which must also incorporate the latest technological innovations for NBFCs.
3) During the appointment of staff in NBFCs, they must consider the experience of people in working with communities and whether they have knowledge about the socio-economic status of the local community and their financial needs.
4) For monitoring of NBFCs, the government should appoint representatives from RBI, NABARD, District Lead Bank, and DRDA as Board Members in NBFCs.
5) If the community or clients are stakeholders in a microfinance NBFC then they would ensure that :
- Only those how have genuine needs will get microloans.
- They will ensure that there is no dual membership and multiple lending amongst themselves.
- They will also control the Interest rate and other charges levied by the MFI.
- By the end of the financial year, the community as stakeholders will also get benefits in the form of Dividends.
- When they realize the benefits of receiving a regular income through dividends, they will be motivated to invest more money in these community-owned companies and they will cut on wasteful expenditure which will result in increase in their savings and also there will be a flow of funds for the development of our nation.
- Poor rural people will become shareholders in the capital markets.