Micro Finance Institution Network (MFIN), the industry association for the micro finance sector, today said it will set up a panel to probe the alleged undue profits made by promoters of micro finance institutions (MFIs) when they were converted to NBFC-MFIs from NGOs.
The panel would initially focus on three major players of the sector, SKS Microfinance, Spandana and Share Microfin and gradually expand its scope of probe.
"MFIN is setting up a high-powered panel to look into the full range of issues related to the transformation of micro finance institutions that evolved from NGOs into NBFC-MFIs," a statement issued by the industry body said.
The three-member panel would be independent of the MFI industry players.
"The members would mainly be from banking, or experts from financial sector or retired bureaucrats. The panel would be formalised by next week and would submit report in 30 days," MFIN Chief Executive Officer Alok Prasad said.
There has been allegations that during the course of transformation of the MFIs, which originally incorporated as non-government organisation, to non-banking finance companies (NBFCs), there has been some undue profits made by the promoters.
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The panel will also look into other connected matters such as accounting practices, valuations and governance.
"Based on the outcome of this inquiry, disciplinary action, as may be considered appropriate, can be taken against any erring member," the statement added.