The Union Cabinet of India cleared a bill, against substantial opposition, that will empower the National Bank for Rural and Agricultural Development (NABARD) to regulate the Indian microfinance sector. Only microfinance institutes (MFIs) operating in the form of trusts, societies and cooperatives will be controlled by NABARD, excluding non-bank financial institutions. This will require all such MFIs to register under the Microfinance Development Council (MDC), which will be a NABARD entity. The MDC will allow MFIs to raise savings only after getting specific approvals from the council. The creation of the MDC will also require the creation of a microfinance ombudsman as an appointed position.
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