Abstract:
In response to the Second Micro Finance Crisis in Andhra Pradesh, which took place in October 2010,
the Ministry of Finance has pro- posed a new Micro Finance Institutions (Development & Regulation)
Bill. This paper undertakes a detailed analysis of the draft Bill in terms of both economic policy and
law. This analysis reveals many weak links, including: a lack of clarity on the objectives of the Bill; an
insufficient focus on protection of the rights of the micro-borrower; lack of clarity about the definition of
thrift; the loss of accountability that comes with multiple regulatory agencies; concerns about the rule
of law; and constitutional issues about powers of the Centre versus the State Government.
