India: Government to set up two funds on microfinance
New Delhi, India, October, 10 2007 -
The Union Government on Tuesday announced that it would set up two funds of Rs. 500 crore each to facilitate easy availability of credit to the poor.
Inaugurating a conference on microfinance here, Finance Minister P. Chidambaram said: "Based on the interim report [of the Financial Inclusion Committee], we have decided to set up two funds — Financial Inclusion Fund and Financial Inclusion Technology Fund of Rs. 500 crore each."
These two funds would be apart from the Rs. 100-crore microfinance development fund that has already been set up by the Government.
Mr. Chidambaram also declared that the Government would implement the recommendations of the committee chaired by C. Rangarajan, Chairman of the Economic Advisory Council (EAC) to the Prime Minister, on submission of its final report.
As for the Government’s role in the microfinance sector, Mr. Chidambaram pointed out that there was as yet no clarity. “It is not yet clear what should the Government do, what should not the Government do, what should the Government regulate and what it should not regulate.”
Till date, the Government has introduced a Microfinance Bill in Parliament with the aim of regulating non-profit microfinance institutions. The Finance Minister noted that various microfinance organisations were operating on different principles although the goal of all such institutions was the same — to provide credit to the poor. However, organisations which operate for profits want interest rates to be higher so as to recover their costs, he said.