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MFIs require extension to comply with the rate cap

By Religare

Microfinance Institutions will require more time of atleast 12- 18 months to comply with the recommendations of the Malegam Committee report. The committee has suggested bringing down the interest rates to 24% and 31-50% for smaller MFIs. The Reserve Bank of India has said that it will take consider on implementing the recommendations by March end. The committee has made suggestions that if the recommendations are accepted, they should be implemented by April 1, 2010."It is only fair that MFIs are given some time to get to this in a phased manner. Businesses are forecast on the basis of certain assumptions with respect to revenue and costs for both people and equipment," said Ajay Verma, managing director and CEO of Sahayta Microfinance.The operational cost for the initial years is approximately 15%. According to the committee's suggestions, to become operationally feasible, MFIs will have to cut down costs considerably.

Story first published: Wednesday, February 2, 2011, 10:01 [IST]
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