Some facts about Microfinance Bill, 2007

HIGHLIGHTS OF THE BILL

• The Micro Financial Sector (Development and Regulation) Bill, 2007 seeks to promote the sector and regulate micro financial organisations (MFO).

• National Bank for Agriculture and Rural Development (NABARD) shall regulate the micro financial sector.

• Every MFO that accepts deposits needs to be registered with NABARD. Conditions for registration include (a) net owned funds of at least Rs 5 lakh; and (b) at least three years in existence as an MFO. All MFOs, whether registered or not, shall submit annual financial statements to NABARD.

• Every MFO that accepts deposits has to create a reserve fund by transferring a minimum of 15% of its net profit realised out of its thrift and micro finance services every year.

• The central government may establish a Micro Finance Development Council to advise NABARD on formulation of policies related to the micro financial sector.

• NABARD shall constitute a Micro Finance Development and Equity Fund to be utilised for the development of the sector.