Posted on February 9, 2019


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

Bhalchander January 24, at 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.

Drop everything from rwport 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 lending methodology, discourage innovation and those clauses that are impractical to enforce.

To conclude, I feel once a special category NBFC MFIs is created and the black sheep is weeded out nothing stops RBI from going ahead with your suggestions below which are all a definite need for the long term sustainability of the sector.

Fourth, the committre has recognized and stressed the importance of off-site and on-site supervision of NBFC MFIs including systemically important ones while also alluding to the need for significantly enhancing the supervisory capacity of RBI with regard to micro-finance. 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 committtee are well taken 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 reporh what is proposed in the Malegam committee report Newer Post Older Post Home.


I think it would be unfair to criticize the Malegam committee report on the committwe 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.

Work From Home This has not offered any sort of immunity to MFIs from state control, then what is it that the committee recommends that changes this? 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. Viewing from the edge of the cliff where the industry stands today, any amount of life support would look like a great relief and such a the life saver must be commended.

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

By recommending creation of a new category – called NBFC MFIs with associated conditions which are perhaps open for discussion – the report has clearly positioned and mainstreamed micro-finance within the framework of the larger financial sector in India.

Ramesh S Arunachalam January 26, at This would be a pareto optimal solution indeed…. Anonymous January 24, at Thanks for sharing this. Everyone was aware of the problem but seemed helpless, all the attempts by Industry association were invain as none had the time or interest to work for a sustainable solution the debate on this continued endlessly till the Govt came down heavily and forced the MFIs to submit the data Excellent blog by Ramesh.

Also the regulators focus when introducing guidelines would be more to see on handling exceptions, so how do you ensure that the borrower is not becoming a member in multiple groups and threatening the very basic principle of peer pressure on which the model works As many have argued, the proposed margin caps would force MFIs to make larger loans. Fourth, the report has recognized and stressed the importance of off-site and on-site supervision of NBFC MFIs including systemically important ones comimttee also alluding to the need for significantly enhancing the supervisory capacity of RBI with regard to micro-finance.


It has also been cheered that the committee asked the state governments to stay out of microfinance regulation.

Malegam Committee Report – Summary of Key Recommendations

But I doubt if it has done justice to the industry as a whole. Kaizad January 28, at 5: This is admittedly a suggestion that perhaps cannot be implemented on the ground.

But the immediate concern reprt the regulator is to address the customer protection and other issues raised by the Govt. Instead of criticizing further let me offer some suggestions the RBI could consider before releasing the regulatory framework: As far as I know – none.

Further, the capping of loan amounts and loan outstanding would severely hurt the clients in the medium and long term in their efforts to climb out of poverty. I doubt if committee changes just by adding a suffix without suggesting micorfinance amends in state moneylending laws. A second aspect is the use of caps for annual family incomerestricting it to Rs.

Sixth, there are several other aspects in the report that require commendation: Ramesh – thanks for another good analysis. 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.