Regulatory and Supervisory Issues Arising from the Andhra Pradesh Micro Finance Crisis. Implementing Best Practice Regulatory Principles and Proportionate Regulation to Support MSME Access to Finance. Sanjay Saxena Managing Director. Background.
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Implementing Best Practice Regulatory Principles and Proportionate Regulation to Support MSME Access to Finance
It is self-evident that in the actual life of man intellectual, social, political, moral we can make no real step forward without a struggle, a battle between what exists and lives and what seeks to exist and live and between all that stands behind either.
— Sri Aurobindo Ghosh
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/ stock / bonds / debentures / securities issued by Government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale /purchase / construction of immovable property. A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner is also a non-banking financial company (Residuary non-banking company).
Significant conversion of NGO MFIs into NBFC MFIs in the years preceding the AP crises of 2010
National Level Regulation
State Level Regulation
The Money Lending Act, though originally intended to restrict the interest rates charged by money lenders, has been applied to MFIs in some states.
Malegam Report Pradesh Micro Finance Crisis(Report of the Sub-Committee of the Central Board of Directors of Reserve Bank of India to Study Issues and Concerns in the MFI Sector – January 2011)andMicro Financial Sector (Development and Regulation) Bill, 2011& Reserve Bank of India Regulation
“Providing financial assistance to an individual or an eligible client, either directly or through a group mechanism for :
“An organisation or association of individuals including the following if it is established for the purpose of carrying on the business of extending microfinance services :
Key Questions Pradesh Micro Finance Crisis
Figures quoted in this presentation have been primarily taken from RBI, SIDBI, NABARD and MoF reports and documents.