A spokesperson for Spandana Microfinance has welcomed the Malegam Committee report stating that the report recognizes the role played by MFI’s in financial inclusion and provision of credit. The spokesperson further added that the report clears ambiguities around microfinance regulation and clears the way for greater oversight by RBI. The report also acknowledges and addresses the concerns raised by the Andhra Pradesh Government.
Spandana Microfinance also welcomes the Interest Cap and has always believed that this would sanitise the industry and promote process efficient MFI’s. Restrictions on the number of MFI’s per borrower, loan size will restrict multiple lending and safeguard borrowers interest. This will also promote healthy competition.
Spandana Microfinance feels that the report also recognizes the need for scale in MFI’s – therefore endorsing Spandana’s approach on building scale . The creation of the NBFC-MFI category will also ensure that confusion surrounding NBFC classification will get resolved. Spandana Microfinance also feels that now there will be far more rational and sustainable growth in the sector. Need for Capital to support growth would be more pronounced now with the new provisioning and solvency requirements.
With the regulatory clarity in place, it will be easier for the social oriented investors to return to the sector with expectations of reasonable returns. Overall the proposals under the report will strengthen the industry and benefit the customers.