MFIs in India should be allowed to accept deposits from public: Yunus

Nobel laureate Muhammad Yunus

said that micro-finance institutions (MFIs) in India should be allowed to accept deposits from the public.

Speaking at the 'PanIIT Global eConclave', the social entrepreneur said that at present MFIs have to go to the banks for money.

"My plea to the Indian government is that MFIs should be allowed to accept deposits from the public. Now, they go to the banks for money," Yunus, the founder of Bangladesh-based Grameen Bank, said on Sunday evening.

He said that the Reserve Bank of India (RBI) has allowed the opening of small finance banks who are able to accept deposits.

Many MFIs such as Ujjivan and Jana have converted into small finance banks after getting licenses from the RBI.

"Finance is the economic oxygen of people. The banking system is not keen to lend money to the poor for which an alternative banking channel has to be developed for them," he noted.

As MFIs are not allowed to accept deposits, the cost of funds at the hands of the beneficiaries become high because they borrow money from banks -- SIDBI and NABARD.

Raising concerns that many MFIs may become "loan sharks", Yunus said the sector should be defined as a "social business" and also pitched for zero dividend-paying entities.

Yunus was awarded the Nobel Peace Prize in 2006 for his works in microcredit and microfinance.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel