National
Plan panel for national policy on micro-finance

New Delhi, Sept. 23 (PTI): The Planning Commission has suggested the Centre to come out with a national policy on micro-finance with a view to financially empower the BPL families and reduce overall poverty in the country.

In a report on strengthening the micro-finance sector, the Plan panel pointed out that there is an urgent need for such a policy wherein efforts by various agencies and service providers are in unison and help evolve a coordinated strategy for a faster and smoother growth of the sector.

"At present, both the government and the private agencies involved in micro-finance have devised their own individual strategies in furtherance of their goals. The absence of a comprehensive national level policy has hindered the orderly growth of the sector," the report said.

As such the government should prepare a model Bill on money lending and direct state governments to enact similar legislations to facilitate the expansion of micro-finance. The Centre could take inputs from the model Bill prepared by a Technical Group for Review of Legislations on Money Lending, which was constituted by the Reserve Bank.

The Bill should look at allowing micro-finance institutions (MFIs) to mobilise savings from their members under a regulatory framework monitored by NABARD.

Micro-finance is generally provided in the form of loans by NGOs, self-help groups and other entities to those who do not have direct access to banks.

Along with micro-finance, the government should also perceive micro-insurance as a key service for people with financial needs. It would would help in keeping the vulnerable section away from poverty trap, the Commission said.

It said, NABARD should coordinate with various insurance companies, Small Industries Development Bank of India (SIDBI), Ministry Small Scale Industry and Rural Development and NGOs to bring out flexible micro-insurance schemes, covering not only loan financed assets, but also life, health, crop and animal husbandry.

Some of the financial institutions should also simplify the formalities of the credit and delivery mechanism to enable semi-literate and illiterate customers to easily access the loan amount, the Commission said.

The government, the Commission said, should also utilise Information and Communication Technology (ICT) for improving the reach of micro-finance in rural areas of the country. The Department of Information Technology should also coordinate with NABARD and Rural Development Ministry to integrate the 'Computer-Munshi System' of accounting with the ICT enabled common service centres.

The Commission is also of the view that the National Sample Survey Organisation (NSSO) and the state governments should conduct periodic surveys of micro-finance organisations in the country and their operations to improve the mechanisms.

National

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