NEW DELHI (Reuters) - The cabinet has approved a bill aimed to bring microlenders under the Reserve Bank of India’s oversight, a minister, who declined to be named as the parliament is in session, said on Thursday.
The Microfinance Institutions (Development and Regulation) Bill needs parliament’s approval to become a law.
Microlenders have been accused of aggressive lending and recovery practices and high interest rates, which attracted calls for regulation.
India’s once-thriving microfinance sector was devastated by a crackdown more than a year ago by the government of Andhra Pradesh, which was the industry hub and largest market.
The state rules resulted in a drop off in loan collections and a drying up of funding for microlenders.
Reporting by Nigam Prusty; editing by Malini Menon