The Reserve Bank today invited public comments on Malegam panel report which suggested among other things capping interest rate at 24 per cent for loans extended by micro finance institutions.
The committee, headed by Reserve Bank’s Central Board Director Y H Malegam, also suggested that small loans cannot exceed Rs 25,000 and creating of a separate category of non-banking financial companies (NBFC—MFI) for the MFI sector.
“The RBI has invited views/comments of all stakeholders and the public at large on the Malegam Committee report on MFIs...latest by February 13, 2011,” the central bank said.
RBI constituted the committee in October last year in the wake of allegations of overcharging and use coercive recovery practices by MFIs that led to a spate of suicides in Andhra Pradesh.
The committee submitted its report on January 19.
These recommendations, the committee said, should be implemented from April 1, 2011.
The panel also said small loans of up to Rs 25,000 could be given to families having an income up to Rs 50,000 per annum. On repayment, it said, the borrowers should be given the option of weekly, fortnightly or monthly return of the loan.
Industry body Microfinance Institution Network (MFIN) has termed the recommendations as balanced.