Plan panel for national policy on micro-finance

The Planning Commission has suggested the Centre to come out with a national policy on micro-finance with a view to financially empower the below poverty line (BPL) families and reduce overall poverty in the country.

In a report on strengthening the micro-finance sector, the commission pointed out that there is an urgent need for such a policy wherein efforts by various agencies and service providers are in unison and help evolve a coordinated strategy for faster and smoother growth of the sector.

"At present, both the government and the private agencies involved in micro-finance have devised their own individual strategies in furtherance of their goals. The absence of a comprehensive national level policy has hindered the orderly growth of the sector," the report said.

As such the government should prepare a model bill on money lending and direct state governments to enact similar legislations to facilitate the expansion of micro-finance. The Centre could take inputs from the model bill prepared by a technical group for review of legislations on money lending, which was constituted by the Reserve Bank.

The bill should look at allowing micro-finance institutions (MFI) to mobilise savings from their members under a regulatory framework monitored by NABARD.

Micro-finance is generally provided in the form of loans by NGOs, help groups and other entities to those who do not have direct access to banks.