Centre mulling to involve MFIs in poverty reduction programmes

Though the Centre has not taken a formal decision in this regard yet, it has informally sounded the state governments on this, days before the current controversy involving the Micro Finance Institutions (MFIs) broke out in Andhra Pradesh, highly-placed official sources here, said.

"In fact, such a proposal first came from the external funding agencies like World Bank and International Fund for Agricultural Development (IFAD). The World Bank and the IFAD recommended to the states, which have been borrowing money from them, to involve MFIs in poverty reduction programmes. The Government of India is probably trying to implement the World Bank agenda," a top bureaucrat pointed out.

But, IAS officer V P Jauhari, who retired as Special Chief Secretary to government and led an inquiry into the activities of MFIs in the state, cautioned in his report against involving MFIs in government programmes.

In fact, he suggested that the state government alert the Government of India as well as the Reserve Bank of India about the "illegal and unethical practices" being adopted by MFIs.
"This will help other states learn from the sad experiences of AP," he added.