Report Summary. Malegam Committee on Microfinance. (January ). Background. The Board of Directors of the Reserve Bank of India. (RBI) constituted a. PDF | On Nov 7, , Saswat Barpanda and others published The Malegam Committee Microfinance Report: Will the MFIs Accept It?. Malegam Committee Report on MFI – Download as PDF File .pdf), Text File .txt) or read online.

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It has also been cheered that the committee asked the state governments to stay out of microfinance regulation.

Fifth, the strong emphasis on corporate governance is note worthy and specifically, the committee has suggested that corporate governance rules will have to be specified encompassing several issues for NBFC MFIs by the regulator. Therefore, this aspect also needs to re-looked and adapted accordingly. It has shown the right strategic intent and direction for establishing a uniform national regulatory framework for micro-finance in India that attempts to put clients first… Ladies and Gentlemen, let us give the committee a Big Warm Hand …rather than JUST nitpicking on specific issues that can perhaps be sorted out through discussion and dialogue… Clearly, it is about time oj we – stop being Penny Wise and Pound Foolish and – recognize the huge and legitimate platform for action that the Malegam committee has provided all of us….

Bhalchander January 24, at Instead of criticizing further let me offer some suggestions the RBI could consider before releasing the regulatory framework: Fifth, the strong emphasis on corporate governance is note worthy and specifically, the committee has suggested that corporate governance rules will microginance to be specified encompassing several issues for NBFC MFIs by the regulator.

Posted by Ramesh S Arunachalam at 9: This ensures that micro-finance will come under the purview of repirt RBI and no longer can microfinance be treated as a fringe activity or as an orphaned child in the larger Indian financial sector.

What authority does RBI has in controlling state’s populist actions. Vijay January 24, at 9: This would be a pareto optimal solution indeed….

Malegam Committee Report on Microfinance: What’s On The Platter?

Bring all private microfinance players under one ambit, not just NBFCs. At the cost of repeating some of the things I have the following to say – You may be aware that despite several requests from the micgofinance till the recent past RBI was reluctant to regulate the sector as they felt it would stifle the growth.

To clarify, the issue is not one of not wanting to take on the regulator – I have been fairly critical of supervision in Indian MF and also talked of regulatory failure here Once the initial recommendations are refined and suitably accepted, I would additionally add that the Malegam committee should microginance the creation of an ongoing working sub-group or expert group that continues to be engaged with the sector for several years to come and that malsgam an ongoing implementable roadmap for delivery of other critical services that clients need.


They are expected to offer policy recommendations on need for RBI’s regulation of the industry larger national interest. As far as I know – none.

Malegam Committee Report – Summary of Key Recommendations

Unfortunately despite this attempt the State Govt still feels that the RBI report is more to protect MFIs interest than the customers interest, so they want more micro management from RBI than what is proposed in the Malegam committee report Eighth, it would also be useful if the committee looks at the aspect of equity investment in MFIs and build necessary safeguards to ensure that what happened in AP does not recur again.

Sasi January 26, at Finally, regulate not micro-manage. Honestly, I am evolving as eeport writer and I appreciate your feedback – both postive and negative Thanks once again Look forward to meeting you some day We have reproduced the same on the Cojmittee Microfinance website. Thanks for sharing this.

Malegam Committee Report – Summary of Key Recommendations

Newer Post Older Post Home. That is what Rameshs analysis shows. Sasi Thanks for your mail and the suggestions. The committee must also recognize that caps on loan sizes and total loan outstanding may be some rfport restrictive for the clients and perhaps even at variation with current RBI policy.

Ramesh – thanks for another good analysis. Hence, the committee may consider removal of the capping on overall interest, while continuing to suggest the capping of the margins — but through more appropriate slabs and with greater flexibility to reoprt the diverse nature of Indian micro-finance and MFIs.

Ofcourse, the good thing is Malegam Committee has specifically suggested that RBI should come out with a detailed customer protection guidelines, which perhaps would give the state Govt some comfort to withdraw the monsterous act A third issue that merits appreciation is the fact that the report has sought to promote greater transparency with regard to interest rates…through various measures.

Malegam Committee Report on Microfinance: What’s On The Platter?

But the immediate concern for the regulator is to address the customer protection and other issues raised by the Govt. By recommending creation of a new category — called NBFC MFIs with associated conditions which are perhaps open for discussion — the report microfinannce clearly positioned and mainstreamed micro-finance within the framework of the larger financial sector in India.


Read on at Microfinance in India Blog. Work From Home commitee Online Jobs that pay you Rs per hour Since time immemorial people have tried to maximize the returns that they get from Consider extending banking correspondent model to MFIs – for and non-profits. While we can separately discuss on the pros and cons of some of the suggestions, I really liked one commirtee of yours which is the public private partnerships. Looking from a public policy perspective, Malegam committee’s role may not be viewed just in light of current crisis but in strengthening financial inclusion microfinancee.

As it is proven that MFIs, are efficient and effective in reaching out the last mile, it would be interesting if the Govt and the MFis can explore and looking at ways of channelising the benefits available from the Govt.

A second mqlegam that deserves appreciation is the fact that while the report has recommended continuation of priority sector funds for MFIs, it was however made it conditional – especially after recognizing some of the key problems like ghost lending, multiple lending, over lending and attempting to outline some measure to tackle them as well.

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Dear Ramesh garu, As always I enjoyed reading this thoughtful analysis. Hence, the committee may want to go with the existing RBI ceiling of Rs 50, for loan size as well as total loan outstanding and back it up by ensuring that MFIs have good loan origination and appraisal systems especially, for large non-consumption loans to individuals, which must also be permitted and appropriate ceilings for consumption loans as already proposed by the cokmittee.

Pragmatism is necessary coupled with better regulation to ensure to craete a win win situation. Last but not the least, the report pf the committee, while providing a good framework for the future, perhaps does not adequately address the existing crisis situation in AP and slowly beginning to unfold in Tamil Nadu and issues around these — there are a large number of clients and JLG who have been shared deport the field level, with each MFI reaching out to them, on a specific day of the week.

You may be aware that within 2 weeks all the MFIs have submitted the data perhaps this is the only way things would work as we are used to learn the hard way.