Structurally,
and functionally, MFIN has been acting as the de-facto SRO for its members. Towards
this end, MFIN has taken a number of significant initiatives such as a
stringent industry code of conduct, establishment of a high powered Enforcement
Committee with external members, development of a full scale credit bureau
ecosystem and promotion of transparency through quarterly publication of
industry reports.
According
to RBI norms released on Tuesday, an SRO must have at least one-third of the
NBFC-MFIs as its members and adequate capital to be able to discharge its
functions without being overly dependent on its member. MFIN has 42 members
that make up 85-90% of the industry and also has requisite capital to meet the
stipulated norms set by the RBI.
Commenting
on this, Mr. Alok Prasad, CEO, MFIN said, “MFIN strongly welcomes the issue of
the SRO guidelines for the Microfinance industry. These guidelines will
substantially aid the process of improved governance and grievance redressal,
within a well defined framework. Over the past 3 years or so, MFIN has been
acting as the de- facto SRO and we now look forward to getting formal
recognition by the RBI, under the guidelines issued today”. Speaking about MFIN’s
vision, he said, “Our aim is to promote the robust development of the
Microfinance sector by facilitating access to finance by millions of our un-served/underserved
citizens.”
While
membership of a SRO has not been made mandatory, the RBI has advised all
NBFC-MFIs to voluntarily become members of at least one SRO. The SRO holding
recognition from the Reserve Bank will have to adhere to a set of functions and
responsibilities, such as formulating and administering a Code of Conduct
recognized by the Bank, having a grievance and dispute redressal mechanism for
the clients of NBFC-MFIs, responsibility of ensuring borrower protection and
education, monitoring compliance by NBFC-MFIs with the regulatory framework put
in place by the Reserve Bank, surveillance of the microfinance sector, training and awareness programmes for the
members, Self Help Groups, etc and submission of its financials, including
Annual Report, to the Reserve Bank.