Muhammad Yunus, the Bangladeshi Nobel laureate who revolutionised the micro-credit sector in his country, has opined that profit-oriented MFIs like SKS should stop calling themselves micro-financiers as they are nothing but "loan-sharks".
"If you want to commercialise, please choose a different name. Real microfinanciers are not commercially minded. Grameen Bank and all my enterprises are not commercial entities but social businesses," Yunus told PTI on the sidelines of CSR meet organised by Wockhard Foundation here last evening.
The world famous social economist said the best service that for-profit MFIs can do to the sector is by stopping calling themselves as MFIs.
Yunus pointed out that "the ultimate objective of MFIs is to ensure financial inclusion and not making profit. So long as they work towards this objective, they are microfinance companies and when they start looking at profit they become loan-sharks or commercial entities."
Yunus wondered how SKS promoter Vikram Akula could change the way he did.
Recalling the early years of Akula, he said, "He was a nice person when he launched an NGO after visiting many of my social businesses in Bangladesh. He interacted with me many a time in the past. But what happened to him now, I don't understand."
On whether the Indian MFIs should be regulated more, Yunus said, "It is not about more or less regulation. What your microfinance sector needs is a separate set of regulations because the area they operate in is different from the area of commercial banks and other lending bodies."
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Muhammad Yunus termed the RBI-appointed Malegam Committee's recommendations on the MFI sector as very healthy and commendable. He said the report could go a long way in correcting many flaws in the Indian MFI space.
He specifically lauded the recommendation on defining an eligibility criteria for getting microcredit, besides the call to cap interest rate charged by MFIs.
"The Malegam report is a very important development in the Indian microfinance sector. By implementing it many of the problems of this industry, which is a must for financial inclusion and socio-economic re-engineering, can be solved."
The committee was appointed following the credit crisis in the MFI sector after the October 2010 Andhra Pradesh ordinance, aimed at regulating the sector. The panel submitted its report to the central bank last month.
Asked if the Government should interfere in MFIs, the Professor said ad-hoc government intervention and regulations could only harm the much-needed sector.
On some of his recent social businesses, Yunus said he had roped in the global foods and dairy goods major Danon to launch Grameen Danon Company to manufacture and sell yogurt to the malnourished kids in his country.
"The motive is to ultimately eradicate malnutrition in Bangladesh," he added.