Which of the following committees was constituted by RBI to study issues and concerns in the Micro Finance Institutions sector?

Correct option is C

·        RBI formed a sub-committee to study the issues and concerns in the microfinance sector under the chairmanship of YH Malegam.

·        In the wake of the AP microfinance crisis in 2010, RBI constituted a committee under the chairmanship of Shri Y H Malegam to study issues and concerns in the MFI sector.

·        The regulatory approach toward microfinance has been largely based on the recommendations of the Malegam Committee.

The key recommendations of the Malegam Committee were as follows:

•  Creation of a separate category of NBFC operating in the microfinance sector to be designated as NBFC-MFI.
• Criteria for defining ‘microfinance loans’ classified as ‘qualifying assets.
•   Prudential norms on capital adequacy and provisioning requirements Prescriptions related to the pricing of credit in terms of a margin cap and interest rate ceiling on individual loans.
•    Transparency in interest charges as well as other terms and conditions of the loan Measures to address multiple lending, over-borrowing and coercive methods of recovery Establishment of a proper system of grievance redressal.

Incorrect options explanation:

·        The Malhotra Committee was a committee formed by the Central Government in 1993 to recommend reforms for the insurance sector in India. The committee was chaired by R.N. Malhotra, the former Governor of the Reserve Bank of India.

·        The Kelkar Committee was a task force formed by the Indian government to study and evaluate various issues, including the public-private partnership (PPP) model, fiscal consolidation, and tax reforms.

·        There are multiple matches for Abid Hussain committee, including a committee on small enterprises and a committee on the Council of Scientific and Industrial Research (CSIR).