with the standing committee rejecting the mfi bill, old questions come back to haunt MFIs

and, after a long time, i write again on india’s search for regulatory mechanism for microfinance.

With the Standing Committee on Finance rejecting the latest avatar of the microfinance bill, old questions about the microfinance sector have resurfaced. Since 2010, when the controversial Andhra Pradesh ordinance made it all but impossible for Microfinance Institutions (MFIs) to operate in their largest market, the industry has been hoping that the passage of the bill would result in the removal of the ordinance.

But now, with the bill going back to the drawing board, says Mathew Titus, the executive director of industry association Sa-Dhan, banks will be nervous about the risk of further state-level interventions…

The other question is on how to regulate MFIs. After the 2010 AP Microfinance crisis, it seemed that a large part of the institutional response would take the form of this Bill — “The Micro Finance Institutions (Development and Regulation) Bill, 2012.” However, with the Standing Committee returning the Bill, that question is wide open again.

also, see these. on the need for the states to have a stay in mfi regulation. another story on the draft bill. on how to regulate mfis – story 1, story 2, story 3. and the need for regulation: story one, story two, story three, story four and story five.

upa1 vs upa2

and so, upa2 presented its final budget – a vote on account – yesterday. and i wrote this quick little story comparing the developmental efforts of upa1 and upa2.

Why Health Secy Keshav Desiraju Was Transferred

something strange happened in mid-february. the bureaucrat who heads india’s union ministry of health was abruptly transferred. and none of the explanations doing the rounds seemed to make much sense.

Why was health secretary Keshav Desiraju transferred? Two days ago, in a statement reproduced by the Press Trust of India, Azad said: “Officers’ and ministers’ portfolios change — it is a regular affair.” In a statement released on Thursday afternoon, the Jan Swasthya Abhiyan, an umbrella organisation of public health professionals, disagreed: “It is inconceivable that a routine transfer would be effected in such a precipitate manner, especially when no replacement for Mr Desiraju appears to have been decided upon.”

The news took even ministry officials by surprise. Senior ministry officials told ET there were no visible signs of tension between the secretary and the health minister. What made the government’s decision even more surprising is that Desiraju had been health secretary for just a year. By transferring him, the government appeared to be violating a Supreme Court order last October directing the government to ensure fixed tenures for bureaucrats — to insulate them from political pulls and pressures. Said former Cabinet Secretary TSR Subramanian, “This is fully contempt of court.”