MFIs need regulation

MFI sector in India is expanding exponentially. There is frenzy of activity is scale up and create value for investors and promoters. In this process it is likely that supervision would slacken and unhealthy competition would start. Signs of this have already manifested in the districts of Kolar, Ramnagarara and Mandya Districts of Karnataka. While larger MFIs might be able to absorb the resultant losses, it is the smaller locally based MFIs will have to bear the brunt.Further there is the risk of these adverse features spreading to other areas affecting the whole sector. The remedy lies in better regulation-either self regulation or better by RBI