RBI panel suggests ways to better accounting system for MFIs

Mumbai, Aug 4 | Updated: Aug 5 2005, 05:50am hrs
An internal group set up by Reserve Bank of India (RBI) on micro finance has supported the idea of computer munshies to manage the proper accounting system for micro finance institutions (MFIs).

The group noted that sustaining the micro finance groups would be a major problem if a proper accounting system and a stronger MIS were not put in place urgently.

The Reserve Bank of India (RBI) on Thursday released the report of the internal group set up to examine issues relating to rural credit and microfinance.

Computer munshies can involve identification of skilled rural youth for the accounting work by providing training as computer munshies (CM), said the report.

Apart from this, the group also recognised information dissemination technologies such as kiosks, call centres and a toll-free number to improve the management of micro finance institutions.

Business processing technologies noted by the group include use of simputers, mobile phone banking, ATMs, smart cards and Personal Digital Assistants (PDAs).

Speaking of use of rating agencies to determine the credibility of an MFI, the RBI-appointed group explained that the critical areas to study would be whether the micro-finance institution (MFI) has a well laid out recruitment and training system, tolerable levels of staff attrition and suitable delegation of operational powers.