Microfinance Focus May 3, 2011: The governor of Reserve Bank, Dr. D. Subbarao addressing the media today said that the RBI’s regulatory policy will not supersede the state or the Andhra Pradesh Government Act. Earlier this morning, Dr. Subbarao in his Monetary Policy Statement for 2011-12 said that the RBI had broadly accepted the framework of regulations recommended by the Malegam Committee.

He said, “Because the Government of AP has the sovereign right to an act and no regulation of RBI will supersede that act. There is a recommendation in the Malegam committee that if the regulation is implemented as suggested by them, there would be no need for individual State Governments to have their own respective laws, and I believe that is a fact.”

He added, “We have continue to hold the dialogue with the government of AP and I’m hoping that once the regulatory architect of the entire microfinance sector, not just that regulated by RBI, but that which is outside the RBI also, once the government of India and RBI together have a well understood and articulated regulations for the entire microfinance sector, I am hoping that the state government will proceed to withdraw own individual legislation.”