HYDERABAD: The first meeting of the high-level committee on micro-finance constituted by the Government in the wake of a spate of complaints against micro-finance institutions (MFIs) will be held here on May 19.

Flooded with complaints of high interest rates and coercive recovery adopted by the recovery agents, the Government constituted the nine-member committee on May 5 with the Principal Secretary, Rural Development, as chairman.

Official sources told The Hindu that the meeting was expected to come up with a code of conduct for MFIs. Compliance of RBI's licensing conditions by MFIs and action to be taken in case of violation will be discussed in detail, they said.

Reports to be discussed

The committee would also study the recommendations of the committee headed by Special Chief Secretary (Revenue) V.P. Jauhari on functioning of MFIs and also discuss the report of CEO, SERP, on the functioning of MFIs in the State. A strategy to mitigate the sufferings of borrowers is likely to emerge after the meeting.

Sources said the Government was committed to healthy growth of alternative credit delivery institutions for providing timely credit to the poor at terms that were fair and transparent. The terms of reference of the high-level committee include review of MFIs' functioning and suggestions to RBI about appropriate action whenever they violate conditions. It was asked to evolve mechanism for securing transparency in MFI operations and ensure lawful procedure in recovery of loans.

Quantum of lending

Besides, it was told to review the quantum of bulk lending accessed by the institutions from banks and formulate appropriate recommendations on lending operations.

The committee was given the mandate to estimate the credit demand and to direct MFIs to operate in specific areas where formal financial network was weak.

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