Almost to mark 10 years of the Malegam Committee Report of 2011 that helped establish micro- finance as a legitimate asset class, the Reserve Bank of India (RBI) released its Consultative Document on Regulation of Microfinance in June 2021. This has several bold and fresh elements. Its big strengths are the light-touch approach and the level regulatory playing field it seeks to establish for the sector. It is also a welcome recognition by the regulator of the changing underlying composition of microfinance lenders. Public policy would take a huge leap forward if other policy institutions adopt a similar approach on archaic laws and rules. As one would expect in such a consultative document, it has left the field open for improvement and suggestions.
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