Abstract:
Recent events in India have brought a fresh focus upon the problem
of regulation in the eld of micro- nance. This paper delineates the
three distinct aspects where government needs to play a role. The
rst is to protect the rights of the micro-borrower, the consumer of
micro- nancial services. The second is that of prudential oversight
of risk-taking by rms operating in micro- nance, since this could
have systemic implications. The third is a developmental role,
emphasising scale-up of the micro- nance industry where the key
issues are diversi cation of access to funds, innovations in distribution
and product structure, and the use of new technologies such as credit
bureaus and the UID. Each of these roles need to be placed in an
existing or a new regulatory agency. There is a case for creating a
new regulatory agency which uni es the consumer protection function
across all nancial products.
