In that light, the Economic Survey 2010-11 brings some badly needed succor to the industry.
- Central Bill:- Chapter V(here, Pg 7) makes the case for a centralized law(the draft of which is under consideration). MFIs would prefer this to the vagaries of State regulation.
- Benevolent approach:- The same Chapter V referenced above makes the economic rationale for not having an interest rate cap. It also elaborates on the overall interest of the borrowers. It could well have been written by the industry trade body!
- Banking License:- The Survey recommends considering NBFCs and MFIs for new banking licenses. However, they may only get the universal banking licenses in the first step, with the para banking activities(like credit cards etc) permit later.
- General Pro lender approach:- Chapter II(here, pg 17) clearly states that the laws should not permit spurious reneging on contracts. Though opined in the context of long term infrastructure financing, the principle does apply to MFI contracts as well.