C. Rangarajan to head PM’s Economic Advisory Council again
By Naagesh Naaraayana Microfinance Focus, Aug. 12, 2009: Former RBI governor and head of the committee on financial inclusion C. Rangarajan has been reappointed as chairman of Indian Prime Minister's Economic Advisory Council (EAC) for the second time, said a government statement on Tuesday. Rangarajan headed the committee on financial inclusion before becoming a member of the Rajya Sabha, upper house of parliament, last year. His reappointment will revive the hopes of microfinance community in India to expedite the work on microfinance legislation that is long due. The Economic Advisory Council advises Prime Minister Manmohan Singh on important policy issues relating to the economic situation. The panel is expected to address key economic issues like rising fiscal deficit, spiralling food prices and drought in the country. Rangarajan has served as Andhra Pradesh governor and as member of the Planning Commission. He was RBI deputy governor for almost a decade and became its governor in 1991. Based partly on his recommendations, a microfinance bill was drafted and introduced in parliament in 2007 but has lapsed. Many of the recommendations still hold key to any new bill on microfinance. RANGARAJAN PANEL RECOMMENDATIONS: Rangarajan, who headed the panel on financial inclusion, had recommended some major steps to be taken by the government to achieve financial inclusion, which include: * Different status for microfinance institutions as ‘Microfinance NBFCs’, with easier norms and access to foreign funds. * At least 80% of the assets of Microfinance NBFCs to be in the form of micro credit. * The panel suggested that like housing finance and infrastructure companies, MF NBFCs should be given tax concessions, to the extent of 40% of their profits, as a proportion to their business portfolio in excluded districts as identified by Nabard without attracting tax. * The supervision of MF NBFCs should be delegated to the regulatory ambit of NABARD by the RBI. * MF NBFCs may also be allowed to become business correspondents of banks for providing savings and remittance services. * The formation of a National Mission on Financial Inclusion comprising representatives from all stakeholders (the RBI, Central and State governments) to achieve financial inclusion within a specific time frame.
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