There is a need for micro-finance companies to shift their focus from providing credit to other services like savings and insurance, according to a report released here on Monday.

The microfinace India state of the sector report 2009, released at the microfinance India summit, observed that unless the microfinance organisations that mobilise small deposits from their members were covered by the microfinance bill to be presented in the Parliament during the winter session, there would not be any significant development towards extending the ambit of microfinance institutions.

In the present form of the microfinance bill, collections of thrift by microfinance institutions would not be regulated by the Reserve bank of India.

The report said that neither the RBI nor the government are giving adequate focus on enabling savings through microfinance.

The limited facility for collection of small savings to be made available appears risky, exposing poor to save with institutions that do not offer deposit protection, it said.

Speaking on the occasion, Princess Máxima of the Netherlands, who is the UN secretary-general’s special advocate for inclusive finance for development, said MFIs in India have made significant headway in offering insurance services for micro-clients.

The expansion of life insurance and the many experiments in health and asset insurance are likely to lead to very positive results in the future. On deposit services, however, there is still much work to be done.

She said India should develop enabling legal frameworks for savings systems. “These legal frameworks should satisfy the government’s concerns about the prudential management of savings, while enabling widespread availability of deposit services to micro-savers, both through the banking system and through strong MFIs.