Should microfinace institutions be brought under regulation??

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Topic : Microfinance and Sustainable Livelihood

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Finance & Accounts

	Should microfinace institutions be brought under regulation?? Created by : Hemant Sharma, Corporate Planning/Strategy Manager, Standard Chartered Group \| 10 29 2010 07:18:08 +0000 Industry : BankingFunctional Area : India(Markets) Keywords : financial institutions rbi micro-finance mfi micro-financial institutions Activity: 325 views; last activity : 12 16 2011 05:48:24 +0000 There is a talk that MFI's could cause a bubble in the country & the only way to prevent this is by bringing them under regulation. Thus all the MFI's will be converted into banks. So, should micro-finance institutions be brought under regulation??

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Yes

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I have posted an article on this issue. The MFIs borrow money from Banks at 11-12% and and operational costs equal to that amount. That comes to 24% approx. Profit is added to that. Normal commercial banks charge interest on reducing balance method. These MFIs are charging on flat rate. The interest, thus becomes anything between 40-50%. Banks collect monthly installments. MFI collects weekly installments. If the borrower fails to pay, penalty is added. people are dying in Andhra Pradesh... Not a day passes without a suicide being reported in vernacular dailies... When do we come out of the closed doors into the open world and understand the realities....? WHEN ?????

By Suryanarayan Murthy, Asst Vice President (Corporate Finance), A Hydro Power Project 10 29 2010 09:19:48 +0000

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Top Argument

MFIs are free of RBI regulation, and have flourished in the consequent freedom to innovate and expand. The RBI takes ages to approve bank branches, while MFIs open several every month. MFIs have cheap, flexible staff, but as banks they will face high, unionized wages and inflexibilities.

By Hemant Sharma, Corporate Planning/Strategy Manager, Standard Chartered Group 10 29 2010 07:18:08 +0000

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Arguments in: "Should microfinace institutions be brought under regulation??"


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Support "Yes" edit in rich text ... Submit Cancel Saving ... 0 0 MFI to successfully serve it’s purpose requires monitoring. Uneducated borrowers are less prudent on financial decisions. Profiteering intentions of MFI, encouraging reckless lending can make the situation worse By Padmanabhan R, Articled / Audit assistant, Finance student \| 12 16 2011 05:48:23 +0000 Edit \| Delete Support \| Oppose 0 0 inn our country anything and everything requires constant monitoring.If done so MFIs will serve the purpose for which they were allowed. By s.baalu , Consultant, XYZ LTD \| 11 23 2010 11:59:38 +0000 Edit \| Delete Support \| Oppose 0 0 MFIs should be brought under regulation as they take interests at a very high rate and also they coerce borrowers to pay loan in time By sumit kumar lal das, B.A student, not any \| 11 04 2010 10:59:48 +0000 Edit \| Delete Support \| Oppose 0 0 Yes,because microfinance sould be a great help to our poor farmers who don't know about banks and it could also help in spreading of financial services in the rural sector. Only concern of RBI is that these firms may coerce the farmers to repay loans and this kind of problem will be solved once they come under regulation. By Priyanka Agarwal, Cerificate student, Indian Institute Of Management (IIM), Indore \| 11 04 2010 10:42:42 +0000 Edit \| Delete Support \| Oppose 0 0 Yes Micro financial institution should be brought under proper statutory regulation, so that MFIs do not exploit the poor. RBI should regulate them in the same way as NBFCs By Shashi Kumar U, Manager accounts & commercial, Mazda Concrete Products Pvt Ltd \| 11 04 2010 05:19:30 +0000 Edit \| Delete Support \| Oppose 0 0 MFIs should be brought under regulation as they force to repay the loan in very coerceive manner By sumit kumar lal das, B.A student, not any \| 11 02 2010 02:33:28 +0000 Edit \| Delete Support \| Oppose 1 0 Mutual Funds should not be regulated as they give better,cheap & timely service to the investors.Moreover they give more dividend &more personal services to the investors. By Ram Krishan Rastogi, Freelancer, Banking \| 10 29 2010 11:31:43 +0000 Edit \| Delete Support \| Oppose 1 0 Yes, Microfinance must be brought under some regulater other in future they will create a lot of problems in the financial market.The investors will loose their investment money and faith.If there is no law in the country,these institutions will uneathical compete with other good banks.Therefore it is necessary to regulate them immediately. By Ram Krishan Rastogi, Freelancer, Banking \| 10 29 2010 11:26:46 +0000 Edit \| Delete Support \| Oppose	Support "No" edit in rich text ... Submit Cancel Saving ... 0 0 The Microfinance Institutions have evolved and are working in the areas where the regulated banks are not helping.. The MFI's should have the freedom to work and there should be no regulation on it, as the size/amount of credit given by them is very low as compared to banks... By Japan Shah, H.O.D, Oxford School of Management \| 12 07 2010 05:33:17 +0000 Edit \| Delete Support \| Oppose
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