began considering if they too should clamp down on the activities of the mfi sector. on the other side, both the mfis and the banks that loaned funds to the mfis were agitated about the security of the funds already lent, and more generally about the prospects for mfi activity in general. 9. in october 2010, the central board of the reserve bank discussed the policy impasse arising out of this situation and decided to constitute a sub - committee under the chairmanship of one of the board members, shri y. h. malegam, to study the issues and concerns in the mfi sector. the malegam committee submitted its report in january 2011 ; its important recommendations were : ( i ) creation of a separate category of nbfc - mfis ; ( ii ) continuation of priority sector status to bank loans to mfis which comply with the regulation laid down for nbfc - mfis ; ( iii ) a margin cap and an interest rate cap on individual loans ; ( iv ) transparency in interest charges ; ( v ) lending by not more than two mfis to individual borrowers ; ( vi ) creation of one or more credit information bureaus ; ( vii ) establishment of a proper system of grievance redressal by mfis ; and ( viii ) creation of one or more “ social capital funds ”. 10. the reserve bank accepted the broad framework of recommendations by the malegam committee. a separate category of nbfcs – non - banking financial company – micro finance institution ( nbfc - mfi ) – was created. further, regulatory instructions were issued mandating the following. for an entity to qualify as a mfi, the aggregate amount of loan extended by it for income generating activity should not be less than 75 per cent of its total loans. bank credit to micro finance institutions extended on or after april 1, 2011 for on - lending to individuals and also to members of shgs / jlgs would be eligible for priority sector status only if not less than 85 per cent of total assets of mfi were in the nature of “ qualifying assets ”. to qualify as an asset under priority sector lending, banks should ensure that the interest rate charged by mfis on final borrowers is capped. further, to protect borrowers from usurious rates of interest, the interest rate that a mfi can charge a customer has been pegged at 12 per cent over the rate at which it borrow

viral v acharya : a case for public credit registry in india theme talk by dr viral v acharya, deputy governor of the reserve bank of india, at the 11th statistics day conference, reserve bank of india, mumbai, 4 july 2017. * * * valuable insights provided by dr. o. p. mall and shri anujit mitra are gratefully acknowledged. good morning governor, deputy governors s. s. mundra, n. s. viswanathan and b. p. kanungo, our chief guest, speakers and the team! introduction to the annual statistics day taking off from shri chetan bhagat ’ s address in the pre - conference dinner last evening, i hope you are all ‘ alive ’ today, rather than just ‘ existing ’ or ‘ fading ’. thank you for coming in large numbers for the annual statistics day conference of the reserve bank of india. this auditorium has a limited capacity and many of our younger colleagues are watching this through videoconferencing at three other venues in this building. 2. this conference of the reserve bank is eleventh in the series but, for me, it is the first statistics day conference. i am eagerly looking forward to being around and witnessing the deliberations. 3. statistics day in india is celebrated on the birth anniversary of late prof p. c. mahalanobis, who graduated with honours in physics in 1912 and was subsequently attracted to the realm of statistics. in modern management parlance, prof. mahalanobis was an “ out of the box ” thinker. all his contributions emanated while studying statistical problems of immediate importance. as the governor mentioned in his inaugural remarks, prof mahalanobis set up the indian statistical institute ( isi ) and the survey lab there subsequently blossomed into the present national sample survey office ( nsso ). the reserve bank has benefitted immensely over the years from its collaboration with the isi on statistical issues and the nsso on measurement issues. 4. in today ’ s conference, we are privileged to have with us several distinguished guests. dr. martine durand, our keynote speaker today is the chief statistician and director, oecd statistics directorate, and a leading voice on global statistical issues. she has flown in early morning today from paris. a warm welcome to india and to the reserve bank, martine – namaste! 5. let me also welcome prof. chetan ghate of the isi