Govt to introduce regulatory mechanism for MFIs

Government will soon introduce an effective mechanism to regulate Micro Finance Institutions, MFIs in the country. Rural Development Minister Jairam Ramesh said that the system will keep a check on MFIs and strictly regulate their functioning to address the problems of indebtness and multiple borrowings. Addressing a function in New Delhi today, Mr. Ramesh said that MFIs are an important instrument of providing financial resources to poor people at acceptable terms. He however stressed the need for an effective regulatory mechanism to define the limits of Micro Finance Institutions. 

Stating that MFIs are not an instrument for removing poverty, Mr. Ramesh said that the Self Help Groups still play the major role in financial empowerment, providing a variety of products at acceptable terms. He however said that Micro Finance Institutions have the advantage of providing the required amount of money at reasonable rates of interests to the financially weaker group of people.