MICROCAPITAL BRIEF: Indian Government Considers Legislation Banning Microfinance Institutions (MFIs) from Making Multiple Loans to Borrowers

Legislators in India are reportedly considering banning microfinance institutions (MFIs) from multiple lending. India’s Finance Ministry is holding talks with the Unique Identification Authority of India, a program seeking to issue identity cards to all of India’s citizens, to develop a system to identify persons who have loans outstanding.

The Ministry contends that owing to competition, some MFIs have resorted to multiple lending without looking at the repayment ability of their customers. MFIs allegedly resort to such practices to grow rapidly, increase profits and maximize investment.

By Witt Gatchell, Research Associate

About Finance Ministry of India:
The Finance Ministry of India, as part of India’s central government, measures fiscal trends like output and prices, external sector and financial developments, balance of payments, foreign exchange reserves and exchange rates, external debt, trade, financial markets and social sector programs. It releases monthly reports which detail these and other trends in the country. As of January 24, 2009 the Minister of Finance is Pranab Makherjee.

Sources and Additional Resources:

[1] The Hindu Business Line, “Microfinance: New Bill will ban multiple loans” by Arun S. http://www.thehindubusinessline.com/2010/11/13/stories/2010111352990100….

MICROCAPITAL BRIEF: Microfinance Institutions Network May Link Up with Unique Identification Authority of India
https://www.microcapital.org/microcapital-brief-microfinance-institutions…

MICROCAPITAL BRIEF: Payment Strike Hits India’s Andhra Pradesh State As Local Governments Urge Microfinance Borrowers Not to Repay
https://www.microcapital.org/microcapital-brief-payment-strike-hits-india…

MicroCapital Universe: Finance Ministry of India
http://www.thehindubusinessline.com/2010/11/13/stories/2010111352990100….

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