The need of the hour is GOI and RBI taking note of the changed scenario, post-emergence of commercial MFIs and move fast towards timely regulatory solutions. Although uniform regulations would be ideal, considering the multiplicity of agencies operating in the area, it would be desirable to restate the roles of the existing regulators and supervisors through an appropriate guidance from the central bank, after appropriate consultations, instead of micro-management based on study reports influenced by views of stakeholders many a time limited to narrow constituency interests. This initiative could cover NBFCs, MFIs enjoying bank credit and cooperatives which would leave only a minority of players in the field. Time is running out as delay of roughly six months would mean crossing one recovery-cycle of micro-credit, by which time, beyond financial losses to the lenders, considerable loss of faith in the system can take place. The MFI issue has already grown beyond reasonable proportions and become a Centre-state issue with political implications. Even where legislative support from state or Centre is necessary, the central bank must provide guidance. It will be near impossible for the stakeholders to arrive at a consensus on costs and margins in a lucrative business like this. Some MFIs have taken the controversy as an excuse for moving to other pastures leaving the Self Help Groups (SHGs) and small borrowers in lurch or have shifted their area of operation from one state to the other where state governments accommodate their recalcitrant behavior. Delay in finding a solution will, therefore, mean closure of livelihood occupations for millions of MFI borrowers who depend on short term credit for carrying on with the ventures they have taken up with hope.
- M G Warrier
