The Malegam committee, set up by the Reserve Bank of India (RBI) to chalk out a framework within which microfinance institutions (MFIs) in India should operate, is set to recommend an upper ceiling for interest rates chargeable to poor borrowers, two persons familiar with the development said. The panel also seems to be in favour of bringing in all for-profit microlenders under RBI regulations. The committee is in the process of finalizing the report and may submit it to the central bank next week. What the ceiling on the lending rate for MFIs could be is not immediately known, but persons familiar with the matter said it will be “reasonable”. The panel, they said, is basing its recommendations on a Basel committee report that tweaks principles of banking supervision to suit regulation of MFIs. It also offers a view of the policies which banking supervisors of some countries have adopted with respect to microfinance.
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