Finance minister Pranab Mukherjee has asked mi­cro-finance institutions (M­FIs) to evolve a code for

RELATED ARTICLES Cash-starved MFIs find saviour in IFC

self-regulation, instead of setting up a regulator and have urged them to have softer interest rates.

The move comes in the backdrop of an increasing number of suicides by borrowers in the state of Andhra Pradesh due to coercive tactics used by recovery agents of MFIs.

Speaking at the Economic Editor’s Conference in the capital on Tuesday, Mukherjee said, “I am not currently thinking of appointing any regulator right now. There should be a code evolved by the institutions themselves on three key areas. The rate of interest should not be very high, they (MFIs) should not be using coercive methods to recover the money and follow prudent lending norms.”

In case the MFIs fail to follow self-regulation, RBI and National Bank for Agriculture and Rural Development (NABARD) would be looking into it, Mukherjee said.

He also added he has asked Andhra Pradesh chief minister K Rosaiah to remove the harsh provisions in the Andhra Pradesh ordinance. However, he did not elaborate on what the suggestions are.