the case of the surprising amendment to the mfi bill

A last-minute change in the bill to govern microfinance institutions has sent banks and MFIs into a tizzy. The bill has raised the loan credit limit tenfold, a move that could alter the character of these lenders from tiny loan providers to the poor to financers of the relatively affluent.

yep. after all the reports of mfis overlending to the poor and pushing them into debt traps, the rbi had introduced a loan limit of rs 50,000 for each borrower. and now we find that the draft MFI bill which has just been introduced in the parliament has upped that credit limit to an incredible rs 500,000. today’s ET carries a (reassuring) story on this change and how it entered the bill.

there are other differences between this bill and its previous avatar — released for public comments last june. but on the whole, this seems to be a better bill than the previous one. better safeguards.

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