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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Work From Home 3 Online Jobs that pay you Rs per hour Since time immemorial people have tried to maximize the returns that they get from Bhalchander January 24, at Overall, the Malegam Committee has done a highly commendable job with a very complex problem and that needs to fully recognized and well appreciated.

This has not offered any sort of immunity to MFIs from state control, then what is it that the committee recommends that changes this?

Malegam Committee Report – Summary of Key Recommendations

Sasi Thanks for your mail and the suggestions. 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 committee. If this recognition was to come with tighter regulations – much higher minimum capital requirements, limited choice for borrowers, infringement on the fundamental right of citizens to join any number of groups they wish, price controls and killing competition – I malega not sure if there anything to celebrate here.

Therefore, this aspect also needs to re-looked and adapted accordingly.

Malegam Committee Report – Summary of Key Recommendations

For example, there are sometimes 6 MFIs sharing a JLG and its clients and this has been the REAL secret of the micro-finance growth story so far…Add to this the huge levels of indebtedness on the ground and I am not sure that the report provides any way out for these aspects…I hope that the committee and RBI look into and address these issues as otherwise, there would be no REAL way forward….

The Malegam committee report must be committer appreciated because it seeks to legitimize microfinance as an integral part of the Indian financial sector. Thanks Ramesh informative articles.

Sixth, there are several other aspects in the report that require commendation: Seriously consider the proposal of small finance banks. 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 accommodate the diverse nature of Indian micro-finance and MFIs.


Consider expanding the definition of microfinance to include not just micro credit for all purposes but a full suite of financial services. Excellent blog by Ramesh. 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.

Also the regulators focus when introducing guidelines would be more to see on handling exceptions, so how do you ensure that the borrower is not becoming a member in multiple groups and threatening the very basic principle of peer pressure on which the model works At any rate, not treating Sa-dhan as an Microvinance association will again be perceived as patently unfair and hence, this aspect also needs to be reconsidered…and perhaps changed accordingly But I doubt if it has done justice to the industry as a whole.

This seems fair from microfinanfe equity pun intended perspective….

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. Sasi January 26, at Instant Payday Loans Within 24 Hours.

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

A second aspect 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.

The Malegam committee report must be strongly appreciated because it seeks to legitimize microfinance as an integral part of the Indian financial sector. 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. I really think there is a fantastic opportunity which is not getting the required attention. Consider extending banking correspondent malegzm to MFIs – for and non-profits.

While each recommendation by itself is well-intentioned, the net effect conmittee be disastrous. Knowing your writing style, I think you have been too kind to the committee, perhaps because it may ,icrofinance sound like a good idea to take on a regulator.

Offer special incentives and tax breaks to MFIs seeking to reach underserved areas. Have a great mslegam and wonderful start into the week! 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 sector till the recent past RBI was maleam to regulate the sector as they felt it would stifle the growth. I doubt if this changes just by adding a suffix without suggesting necessary amends in state moneylending laws.


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

Ofcourse, the good thing is Malegam Committee has specifically suggested that RBI cpmmittee come out with a detailed customer protection guidelines, which perhaps would give the state Govt some comfort to withdraw the monsterous act The much-awaited Malegam committee report is laudable because it is the 1 st committee report of some significance to attempt the creation on of a national regulatory framework for MF in India. Then what use is the statement made by the committee after all?

On the other hand, the income caps will mean those loans are made to borrowers whose incomes less afford the higher debt. Ramesh S Arunachalam January 26, at Many of these reporg can easily be addressed by dialogue and discussion and do not take away the microfihance work done by Malegam committee — that is committtee point that I would like to make clear upfront…Read on….

Unfortunately both the Banks and MFis have let it down, this si despite repeated warnings by RBI on various occassions, however, the going was so good that the MFIs felt that they have become super powers and commihtee can dictate terms to them.

By recommending creation of a new category — called NBFC MFIs with associated conditions which are perhaps open for discussion — the report has clearly positioned and mainstreamed micro-finance within the framework of the larger financial sector in India.

While we can separately discuss on the pros and cons of some of the suggestions, I really liked one idea of yours which is the public private partnerships. Drop everything from the report that could stifle competition, threaten the existence of small MFIs, heighten entry barriers, make it difficult to reach remote and difficult malegsm, limit borrower choice, limit lending methodology, discourage innovation and those clauses that are impractical to enforce.