Under the proposed Micro Finance Act, a Micro Finance Regulatory and Supervisory Authority will be established to perform the functions and responsibilities of licensing, regulating and supervising companies, non-governmental organizations, co-operative societies and other entities engaged in micro finance Business. He said that while this is a welcome development, it needs to be properly guided and controlled, if the desired results are to be achieved at the national level.
According to the Act, Micro Finance Institutes (MFIs) will be authorized to provide credit for different types of economic and trading activities, excluding foreign exchange transactions.
Housing will also be an eligible activity.
Apart from lending and deposit taking, MFIs will also be permitted and encouraged to provide various other ancillary services including storage and safe custody facilities, hedging facilities, investment advice and other advisory and training support to micro-enterprises.
The Micro Finance Regulatory and Supervisory Authority will also have powers to determine various parameters of MFIs and their operations.
Minimum Net Assets and the
minimum ratio of liquid assets to be maintained by MFIs, types and maximum maturity of investments they can make, maximum customer limits applicable to deposits and advances, upper limits for maturity and interest rates for advances and deposits and maximum charges rates of commission applicable to other services are some parameters to be fixed by the proposed Micro Finance Authority.
Fernando said MFIs will be required to maintain a Reserve Fund and a Deposit Protection Fund in the stipulated manner.
The minimum prescribed ratio of credit allocation for low income persons and micro-enterprises will also have to be maintained. “With these provisions, the proposed Micro Finance Act seeks to strengthen the Micro finance sector and to ensure the healthy and viable growth of all Micro finance Institutions with professional, prudential and transparent management so as to protect and further the interests of all stakeholders and to achieve greater financial inclusion, Fernando said.
Posted on Thursday, October 14, 2010 @ 09:00:45 LKT by SaNDuNSource: www.topssrilanka.com
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