MFIs need a separate regulator: Yunus
Nobel laureate and Bangladeshi economist Muhammad Yunus, who brought radical changes in the micro-credit area in his country by setting up the Grameen Bank, called for a separate regulatory mechanism for the Indian microfinance sector.
"It is not about more or less regulation. What your microfinance sector needs is a separate set of regulations because the area they operate in is different from the area of commercial banks and other lending bodies," he told PTI on the sidelines of a CSR summit, organised by the Wockhard Foundation.
Yunus, who was answering a question about whether Indian MFI sector needed more regulation, demanded that companies like SKS Microfinance and others like it, who have turned "loan-sharks" overnight by commercialising, should stop calling themselves microfinanciers.
This is the best service they can do to the "real micro- lenders," he said.
"If you want to commercialise, please choose a different name, and not micro-financiers. Real microfinanciers are not commercially minded. Ours is not a commercial enterprise but a social business," the professor said.
He further pointed out that "the ultimate objective of MFIs is to ensure financial inclusion and not making profit.
So long as they work towards this objective, they are microfinance companies and when they start looking at profit they become loan-sharks or commercial entities."
Source: http://www.indianexpress.com/news/mfis-need-a-separate-regulator-yunus/752243/
