The finance minister said the government was not considering a regulator for microfinance institutions (MFIs), but the industry should develop a code to keep lending rates within moderate levels.
"I am not currently thinking of appointing any regulator right now," Pranab Mukherjee said. "We expect there should be a code evolved by the institutions themselves where rate of interest are not abnormally high and there should not be a coercive mechanism to recover money."
The Andhra Pradesh government recently promulgated an ordinance to check MFIs, after a number of suicides were reported in the state, allegedly due to recovery agents' strong-arm tactics.
"I had a talk with Chief Minister on phone and suggested certain corrections in the ordinance...to see that the harsh provisions are taken care of," Mukherjee said.