RBI creates separate NBFC category for MFIs

In what is being seen by the Indian microfinance industry as a first step towards a proper policy regulatory framework for the Indian microfinance industry (MFIs), the Reserve Bank of India on Friday announced the creation of a new category of non-banking financial companies for MFIs.

Reacting to the development, S. Viswanatha Prasad, co-founder of the Bellwether Microfinance Fund, the country's first microfinance investment fund, said: "While this was expected as per the YH Malegam Committee recommendations, it is important as it in many ways signals the start of efforts at having a full regulatory framework for the Indian microfinance sector.''

While the much awaited microfinance Bill, still stuck at an inter-ministerial discussion stage, is yet to be tabled in Parliament, this step, experts feel, is in the right direction.