24

Sa-Dhan Patrika

Volume 6

Issue 1

Dr Arjun Sengupta, Chairman, National

experience which Brazil has had in the

C o m m i s s i o n on Enterprises in the

provision and growth of mF. Clearly

Unorganised/Informal Sector, was of the

demarcating the growth of the sector

opinion that any regulatory structure in

into six phases, he highlighted the role of

place should be designed in such a way

supportive governmental legislations. The

that it did not curtail the element of

guidelines provided by the banks to

The unorganised

flexibility enjoyed by it currently. In fact,

extend the scope of their activity, either

sector though has

the government could think in terms of a

through the setting up of branches or

been

grant fund towards meeting the capital

through other agencies, resulted in Brazil

characterised by

requirements of the mFIs/mF sector. This

witnessing the emergence of a number

high transaction

would facilitate growth by increasing

of banking correspondents, which started

costs and lending

accessibility to funds, without curtailing

providing services to the people who

and credit risks

the autonomy over the execution of

were out of the ambit of banking services

but the recent

developmental functions. However, with

till then.

advancements in

the regulatory framework in place, these

information

institutions stood the risk of being brought

Dr Narayan observed that the Grameen

technology would

under the umbrella of government rules

Bank experience in Bangladesh would

reduce the costs of

pertaining to the tax regime, cap on

not have clicked had not there been

collecting

lending rates etc, he cautioned

the political will to recognise its

information and

importance. Inaccessibility of credit to

assessing risks

Technical Session I

the poor being one of the issues that led

Growth of Microfinance: Issues

to the nationalisation of banks in India,

and Challenges

the public sector banks ought to own

The first Technical Session was chaired

responsibility for the current situation. The

by Dr Arjun Sengupta and later by Dr S

mFIs should focus on providing creative

Narayan, formerly Chief Economic

support to enable the poor overcome

Advisor to the Prime Minister of India and

hardships and maximise survival, he

focused largely on the issues and

observed in his remarks at the conclusion

challenges confronted by the mF sector.

of the session.

Udaia Kumar of SHARE Microfin Limited,

Technical Session I I

brought to attention the changing face

Facilitating Legal and Regulatory

of mF in India and the challenges in the

Framework

d a y s ahead. The lack of a proper

organisational form that addresses

Technical Session II on the legal and

simultaneously the concerns of the poor

regulatory framework required towards

and offers deposit services to them, the

facilitating the growth of mFIs was

restrictions imposed on access to external

chaired by Dr Rakesh Mohan, Secretary,

commercial borrowings (ECBs) at

Economic Affairs, Government of India

cheaper rates, the reluctance of the

(GoI). Observing that RBI is one of the

commercial banking system to transfer

few central banks which has in its charter

the benefits of decrease in interest rates

mention of agricultural credit, he said

to the sector, the low credit flow to the

that credit for the unorganised and the

sector from the banking system due to

a g r i c u l t u r a l sector had been an

the RBI insistence on KYC norms-- were

important preoccupation of the

all cited as impediments to the growth of

country's administrators. The mF

mF services in the country.

movement is yet another link in the

constant process of credit innovations in

K Narendar of Kalanjiam Foundation

the country. The unorganised sector

reiterated the importance of capacity

though has been characterised by high

building to prepare populations to

transaction costs and lending and credit

address their own problems of

risks but the recent advancements in

development. The provision of financial

information technology would reduce

services, he said, should be considered

the costs of collecting information and

as instrumental towards addressing the

assessing risks.

overall development of the poor.

Constant interactions with the various

T K Banerjee of IRDA drew the attention

layers of the government, banking

of the audience to the low level of

institutions and concrete relief efforts for

i n s u r a n c e  penetration  in  India,

the poor during times of distress would

compared to the developed world. This

go a long way in forging the social capital

assumes all the more importance due to

that is required to reinforce ideas of

the loss of assets and lives during natural

development.

disasters. Details regarding the draft

regulatory framework for micro-insurance

Manuel Thedim, from Brazil provided the

proposed by IRDA was presented to the

audience with a flavour of the rich

audience and opinions solicited from the