Hyderabad: Nobel laureate Muhammad Yunus said on Wednesday that microfinance institutions should be given special banking licenses to accept deposit as it could prevent them from take capital markets route to expand their operations.
“Tapping capital markets is not a good idea because then you will have to promise people that you are making money from the poor. Some people in Andhra, particularly SKS, tried to make money for themselves. That’s what created problems,” Mr Yunus, whose Grameen Bank set a model for microcredit institutions, said at conference in Hyderabad on Wednesday.
At his Grameen Bank, he said funds come only from depositors, which will be used for the lending. Commenting on MFI Bandhan getting a bank license, Mr Yunus said MFIs should be given only a restricted license to accept deposits from public, which could be lent only for micro borrowers.
“It is a good thing that Bandhan got the license. But with a banking license, you are given lots of opportunities to make money. If you get interested in that part then you will start ignoring the original motive,” he said.
