Microfinance and Credit Regulatory

The proposed Microfinance and Credit Regulatory Authority eliminates people’s right to organize credit services to suit their development needs by deeming any community savings and credit initiative illegal unless licensed. Promoted to regulate the unregulated and address the microfinance crisis, the Credit Regulatory Authority extends a set of overarching regulations imitating the Banking and Finance Act on Community-Based Savings and Credit Providers (CBOs). CBOs engaged in savings and credit range from the Funeral Aid Societies and Women’s Organisations to Sarvodaya Shramadana Societies. At present, they address the credit needs of low-income women, farmers, fishers, and others excluded from the formal finance sector, providing alternatives to predatory microfinance. However, suggested regulations dismiss their unique character as an interface between the formal and informal, performing a vital social welfare and developmental role at the grassroots. The Authority’s thrust weakens CBOs, threatening low-income people’s ability to manage their economies and ultimately eroding their financial sovereignty.