'MFIs should look at tapping capital markets'

New Delhi: Micro-finance institutions need to explore the option of raising funds from the capital market and take advantage of the government schemes for investment purposes, a top finance ministry official said today.

“We perhaps need to look at the issue of resource for micro-finance institutions. We have not yet looked at possibility of tapping the capital markets specially when we have several new schemes like Infrastructure Development Fund (IDF),” Department of Economic Affairs (DEA) Secretary Arvind Mayaram while speaking at the Microfinance India Summit 2012 here.

[caption id=“attachment_539053” align=“alignleft” width=“380”]  SKS Microfinance has been the only MFI to come out with a public issue so far. Reuters[/caption]

SKS Microfinance has been the only MFI to come out with a public issue so far. Mayaram also asked the MFI industry to initiate steps to dispel the impression that giving funds to poor and vulnerable sections of society was a risky proposition.

More from Investing

MSMEs are breaking the traditional convention. Look who’s funding them Scale-up your startup without an investor! Here’s how

“The issue (of) this risk perception of lending to poor has been very high. And this aspect needs to be looked at and also it is important have a study on this area,” he said. Finance Minister P Chidambaram had yesterday expressed hope that the Microfinance Bill will be cleared by the Standing Committee early and then brought to Parliament for passage.

The Micro Finance Institutions (Development and Regulation) Bill, 2012, is currently being scrutinised by a Parliamentary Standing Committee.

The Bill seeks to empower the Reserve Bank to regulate the microfinance industry and fix interest rates ceiling on loans to be provided by lender.

The Bill, which was drafted in the backdrop of problems faced by borrowers of MFIs in Andhra Pradesh and other states, seeks for compulsory registration of MFIs with the RBI. Microfinance -the business of doling out small loans at high interest rates to poor people who are unable to access conventional lending instruments-has come under intense regulatory scrutiny in the wake of an Act passed by the Andhra Pradesh government.

PTI