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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Sixth, there are several other aspects in the report that require commendation: More importantly, the resultant search for microfniance efficiencies will surely result in more short cuts being taken with regard mmalegam client acquisition, client engagement and the like – we all know what problems that all of this caused in AP in the recent past.

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 am not sure if there anything to celebrate here. Instant Payday Loans Within 24 Hours.

Micrfinance 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 reluctant to regulate the sector as they felt it would stifle the growth.

Knowing your writing style, I think you have been too kind to the committee, perhaps because it may not sound like a good idea to take on a regulator. 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.

Excellent blog by Ramesh. Newer Post Older Post Home. 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. Seriously consider the proposal of small finance banks.

Malegam Committee Report – Summary of Key Recommendations

I dont want to get into this as it would open up a number of questions microvinance the suicides of the customer and the lack of customer protection measures under existing regulation. The Malegam committee report must be strongly appreciated because it seeks to legitimize microfinance as an integral part of the Indian financial sector. That said, I am therefore a bit perplexed by the strong initial criticisms of the Malegam report…While stakeholders appear to have perceived several weaknesses in the report, I try to list some of these below and provide some explanations with regard to these issues, apart from suggesting ways forward.


Anonymous January 24, at 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?

Honestly, I am evolving as a writer and I appreciate your feedback – both postive and negative Thanks once again Look forward to meeting you some day 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 terrains, limit borrower choice, limit lending methodology, discourage innovation and those clauses that are impractical to enforce.

Similar to SHG-bank linkage program. I doubt if this changes just teport adding a suffix without suggesting necessary amends in state moneylending laws. At any rate, not treating Sa-dhan as an MFI association will again be perceived as patently unfair and hence, this aspect also needs to be reconsidered…and mlaegam changed accordingly The committee must also recognize that caps on loan sizes and total loan outstanding may be some what restrictive for the clients and perhaps even at variation with current RBI policy.

Once the initial recommendations are refined and suitably malegaam, I would additionally add that the Malegam committee should recommend 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 creates an ongoing implementable roadmap for commitree of other critical services that clients need.

But my concern is microfinancee about that. Thanks for sharing this. 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 mifrofinance recommends that changes this? Malegam Committee on Microfinance leaves us with more questions than answers.

Sasi Thanks for your mail and the suggestions. Fourth, the report has recognized and stressed the importance of off-site and on-site supervision of NBFC MFIs including systemically important ones while also alluding to the need for significantly enhancing the supervisory capacity of RBI with regard to micro-finance.


Everyone was aware of the problem but seemed helpless, all the attempts by Industry association were invain as none had the time or interest to work for a sustainable solution the debate on this continued endlessly till the Govt came down heavily and forced the MFIs to submit the data 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 agenda.

Thanks Ramesh informative articles. To conclude, I feel once a special category NBFC MFIs is created and the black sheep is weeded out nothing stops RBI from going ahead with your suggestions below which are all a definite need for the long term sustainability of the sector. I agree that the committee provides much needed legitimacy to the sector by emphasizing the need for enhanced regulation.

Posted by Ramesh S Arunachalam at 9: Should RBI be looking at a special category of Banks for such limited players that too under the current circumstances.

Malegam Committee Report – Summary of Key Recommendations

Please refer to www. A very critical aspect indeed…. Vijay January 24, at 9: Instead of criticizing further let me offer some suggestions the RBI could consider before releasing the regulatory framework: The Malegam committee report must be strongly appreciated because it seeks to legitimize microfinance as an integral part of the Indian financial sector.

Dear Ramesh garu, As always I enjoyed reading this mucrofinance analysis.

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

But what I fail to understand is how is microfjnance going to help in cases like AP. Many of these issues can easily be addressed by dialogue and discussion and do not take away the excellent work done by Malegam committee — that is a point that I would like to make clear upfront…Read on….

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 Then what use is the statement made by the committee after all?

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