Building the regulatory framework for microfinance in India

Mathew Titus

This article outlines India's policy on regulating microfinance. The existing framework in India is a result of microfinance practitioners' strategic emphasis on mainstreaming financial services to the
poor. The policy pronouncements started by addressing the emerging requirements of self-help groups, but dialogue with the government has gone on to develop microfinance principles for a diverse range of
operating models. The article begins therefore by outlining the nature of microfinance interventions, both legal and operational. Following this is a brief history of the dialogue through the different
forums between the policy makers, regulators and the NGO community. The effort so far is interestingly poised and is a notable example of the collaboration and subsequent change in the relationship between
non-government and government organizations. Future progress will however be contingent on the ability of microfinance organizations to stabilise around a few operating roles and standards. In addition,
the existing operating model of dialogue between government organizations and the NGO sector will have to coalesce into collaboration.