Inderscience Publishers

Regulating microfinance sector in India: emerging issues

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In this research paper, microfinance has been viewed as a potential instrument to promote entrepreneurship. Against this backdrop, the proposed Indian regulatory policy (in the form of draft bill, recommendations of committees) towards microfinance sector has been evaluated. It has been observed that policy is silent on issues like taxation, sourcing of fund, deposit insurance, cost of supervision, portfolio supervision tools, asset sales/mergers, ownership suitability and taxation. The Indian regulation is still in draft form and there is fair chance of improvements in final draft. This provides constraint on this research work. These issues are important to attain goal of regulators in terms of maximising social value proposition and sustainability of microfinance institutions. This research is the first work on evaluation of Indian regulation towards micro finance sector reported in financial literature.

Keywords: microfinance institutions, entrepreneurship, microfinance regulation, investment assets, India, social value, sustainability

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