Malegam report: How does micro finance industry view it?

The long awaited Malegam report on microfinance companies was submitted today. The committee has recommended that MFIs charge no more than 24% on loans and that the margins they make be also no more than 10%. The committee has recommended the creation of a separate category of MFIs called NBFC-MFIs. These NBFCs can give loans only to families whose total income is not more than Rs 50,000 per annum, and largely for income generation purposes.

In an interview with CNBC-TV18, Vijay Mahajan, Founder, BASIX and Chairman, MFIN, speaks about the report and gives his outlook going forward. Here is a verbatim transcript of the exclusive interview with Vijay Mahajan on CNBC-TV18. Also watch the accompanying video. Q: What is your reaction to the various findings and the recommendations made by Mr Malegam? A: The Malegam committee report is a very good step forward to the whole controversy about microfinance institutions, particularly non-bank finance companies doing micro finance because that comes under RBI purview. So, the report has very clearly recognised the legitimate role of NBFCs and micro finance and has recommended new category of NBFCs for micro finance. While defining that category it has given several parameters, firstly 90% of all assets other than cash should be in micro finance loans and micro finance loans have been defined as no more than Rs 25000 per individual. So that