Lok Sabha Question No. 1094 (UNSTARRED), answered on 2016-04-29
Subject: Micro-Finance Institutions
Ministry: FINANCE
Asked by: SHIVKUMAR CHANABASAPPA UDASI, SHASHI THAROOR

## Draft Reply Govt. of India Ministry of Finance Department of Financial services

## LOK SABHA UNSTARRED QUESTION No. 1094 TO BE ANSWERED ON THE 29 th  April, 2016 / Vaisakha 9, 1938 (Saka)

## Micro-Finance Institutions

QUESTION ANSWER

1094. SHRI SHIVKUMAR UDASI: DR. SHASHI THAROOR:

Will the Minister of FINANCE be pleased to state:

- (a) whether absence of regulation by a central micro-finance authority, unauthorised agents are taking unwarranted  advantage  of small proprietors  and  if  so,  the  details thereof;
- (b) whether the NSSO data 2013 reveals that only 4 per cent of the 5.77  crore  small  business  units  in India are financed through institutionalised agencies and if so, the details thereof;
- (c) whether  the  Government  has  any proposal to regularise these microfinance institutions, by either

## To be answered by ( MINISTER OF STATE IN THE MINISTRY OF FINANCE) (SHRI  JAYANT SINHA )

- (a) Depending upon the nature of organisational structure, ownership, level of operations etc., Micro Finance  Institutions  (MFIs)  are  regulated  under  extant laws  and  guidelines  of  the  Reserve  Bank  of  India  (RBI) and money lending laws of State Governments. Complaints  against  NBFC-MFIs  only  are  monitored  by RBI. As per information furnished by RBI, a few complaints  against  NBFC-MFIs  have  come  to  notice which have been subsequently redressed
- (b) 67 th round  of National  Sample  Survey  Office (NSSO) covering Unincorporated Non-agricultural Enterprises (Excluding Construction) estimated the number of such enterprises in the country at 5.77 crore. It is  estimated  that  the  overwhelming  majority  of  such enterprises continue to have limited access to institutional finance.

(c)&(d): NBFC-MFIs  are  regulated  by  RBI  under  the provisions of Chapter IIIB of the RBI Act, 1934. RBI has issued  regulatory  guidelines  and  Fair  Practice  Code  for

| assigning a regulatory role to the Reserve Bank of India or establishing an independent regulatory authority; and (d) if so, the details thereof along with the steps taken by the Government in this regard?   | these NBFC- MFIs. RBI has given recognition to two Self Regulatory Organisations (SROs). MFIs which are members of these Self Regulatory Organisations (SROs) also adhere to a voluntary industry Code of Conduct.   |
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## Govt. of India Ministry of Finance Department of Financial services

## LOK SABHA UNSTARRED QUESTION No. 1094 TO BE ANSWERED ON THE 29 th  April, 2016 / Vaisakha 9, 1938 (Saka)

## Micro-Finance Institutions

## QUESTION

## 1094. SHRI SHIVKUMAR UDASI: DR. SHASHI THAROOR:

Will the Minister of FINANCE be pleased to state:

- (a) whether  absence  of  regulation  by  a  central  micro-finance  authority,  unauthorised agents are taking unwarranted advantage of small proprietors and if so, the details thereof;
- (b) whether the  NSSO data 2013 reveals that only  4  per  cent  of  the  5.77  crore  small business units in India are financed through institutionalised agencies and if so, the details thereof;
- (c) whether  the Government  has  any  proposal  to  regularise these micro-finance institutions,  by  either  assigning  a  regulatory  role  to  the  Reserve  Bank  of  India  or establishing an independent regulatory authority; and
- (d) if so, the details thereof along with the steps taken by the Government in this regard?

## ANSWER (MINISTER OF STATE IN THE MINISTRY OF FINANCE) (SHRI JAYANT SINHA)

- (a) Depending upon the nature of organisational structure, ownership, level of operations  etc.,  Micro  Finance  Institutions  (MFIs)  are  regulated  under  extant  laws and guidelines of the Reserve Bank of India (RBI) and money lending laws of State Governments. Complaints against NBFC-MFIs only are monitored by RBI. As per information furnished by RBI, a few complaints against NBFC-MFIs have come to notice which have been subsequently redressed
- (b) 67 th  round of  National Sample Survey Office (NSSO) covering Unincorporated Nonagricultural  Enterprises  (Excluding  Construction)  estimated  the  number  of  such enterprises  in  the  country  at  5.77  crore.  It  is  estimated  that  the  overwhelming majority of such enterprises continue to have limited access to institutional finance.
- (c) & (d) NBFC-MFIs are regulated by RBI under the provisions of Chapter IIIB of the RBI Act, 1934. RBI has issued regulatory guidelines and Fair Practice Code for these NBFC-  MFIs.  RBI  has  given  recognition  to  two  Self  Regulatory  Organisations (SROs).  MFIs  which  are  members  of  these  Self  Regulatory  Organisations  (SROs) also adhere to a voluntary industry Code of Conduct.
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