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'No regulator for MFIs'

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.

business Updated: Oct 26, 2010 20:52 IST
HT Correspondent

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.

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