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DRAFT OF IBA18/03/15

[Document title]

THE MICRO UNITS DEVELOPMENT AND REFINANCEAGENCY (MUDRA) BANK BILL, 2015

A

BILLTo establish a bank to be knon as !ic"o #nits De$elo%ment an&Re'nance A(enc) *!#DRA+ Bank to o%e"ate as a %"inci%ala(enc) to %"omote, &e$elo%, an& "e(ulate mic"o 'nanceinstitutions en(a(e& in %"o$i&in( access to c"e&it an& othe"'nancial se"$ices to the "u"al an& u"ban %oo", ce"tain&isa&$anta(e& sections o- the %eo%le an& to the mic"o businessentities an& to %"o$i&e 'nancial an& othe" su%%o"t to such mic"ounits an& -o" matte"s connecte& the"eith.

Be it enacte& b) a"liament in the it)2ith ea" o- the Re%ublico- In&ia as -ollos4 2

CHAPTER IPRELIMINARY

ho"t title an&commencement.

*1+ This Act ma) be calle& the !ic"o #nits De$elo%ment an&Re'nance A(enc) *!#DRA+ Bank Act, 015.

*+ It shall come into -o"ce on such &ate as the 6ent"al7o$e"nment ma), b) noti'cation in the Ocial 7a9ette, a%%oint

an& &i:e"ent &ates ma) be a%%ointe& -o" &i:e"ent %"o$isions o-this Act an& an) "e-e"ence in such %"o$ision to thecommencement o- this Act shall be const"ue& as a "e-e"ence tothe comin( into -o"ce o- that %"o$ision.

De'nitions. 2.(1)In this Act, unless the contet othe"ise "e;ui"es, means a(("e(ate "ate %e"annum in %e"centa(e consistin( o- inte"est, %"ocessin( -ees,se"$ice cha"(es an& an) othe" cha"(es o" -ees "ealise&b) themic"o 'nance institution on an) mic"o 'nance se"$ices%"o$i&e& to an) client?

*b+ =client> means an) bene'cia") o- mic"o 'nancial se"$iceso" a membe" o- sel-2hel% ("ou% o" an) othe" ("ou% a$ailin(mic"o 'nancial se"$ices eten&e& b) an) mic"o 'nanceinstitution.(c) c!"!#$%&'$ *!c$'+ -$&* & *!c$'+ %$/*'$%$&* *c $% &+ 3&4 %$3&'/ '! c!"!#$%&'$ *!c$'$*!% '$ '-$ 6$/ !%c$7

*&+ eistin( !#DRA 6om%an) @imite& means a com%an)establishe& as a subsi&ia") o- mall In&ust"ies De$elo%mentBank -o" the %u"%ose o- %"omotion, &e$elo%ment an&"e(ulation o- mic"o 'nance institutions?

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[Document title]

*e+ =ma"(in> means the &i:e"ence beteen the annual%e"centa(e "ate cha"(e& b) the mic"o 'nance institution an&the %e"centa(e o- the cost o- -un&s "aise& b) the mic"o'nance institution -o" %"o$i&in( an) mic"o c"e&it -acilities?

*-+-c%! c%$' &c3'$* means an) loan, a&$ance,"e'nance o" an) (ua"antee (i$en o" an) othe" c"e&it eten&e&in cash o" kin& ith o" ithout secu"it) o" (ua"antee?

(/)-c%! 8&c$ *'''! -$&*,9

(A) & c!-#&+ %$/*'$%$ $% *$c'! : ! '$C!-#&$* Ac', 201:7 !%

(B) & 6!+ c!%#!%&'$7 !%(C) & '%*' $*'&63*$ $% '$ I& T%*' Ac',

1;;2 & %$/*'$%$ $% &+ S'&'$ 3&4 %$3&'/'! %$/*'%&'! ! '%*'* &

*!c$'$*7 !%(D) & *!c$'+ %$/*'$%$ $% '$ S!c$'$*

R$/*'%&'! Ac',1;


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[Document title]

()-c%! 8&c&3 *$%c$* -$&* &+ !$ !% -!%$! '$ !33!4/ 8&c&3 *$%c$* #%!$ &-$3+?"

() -c%! c%$' &c3'$* !3/ & &-!' !'$@c$$/

&//%$/&'$ T$ L&>* %#$$* #$% -c%! ',6$3!// '! &3* & !' $@c$$/ %#$$*T4$'+ L&>* #$% !'$% -c%! '*.

P%!$ '&' '$ C$'%&3 G!$%-$' -&+, 6+!'8c&'! c%$&*$

'$ &-!' ! -c%! c%$' &* ' -&+ $$-$c$**&%+ & &3*!

*#$c+ $%$' &-!'* ! -c%! c%$' !%*#$c&3 #%#!*$ *c &*

!*/7

() #$*! !% *%&c$ *$%c$*7 () %$-''&c$ ! * *6$c' '! #%!% #%!&3! '$ R$*$%$ B&> ! I& & *c !'$% '$%-*& c!'!*, &* -&+ 6$ *#$c8$ 6+%$/3&'!*7

() &+ !'$% *c *$%c$*, &* -&+ 6$ *#$c8$, #%!$ 6+ &+ -c%!8&c$ *'''! *c

!%- & -&$%, &* -&+ 6$ #%$*c%6$7

Rulemakin(

() =!ic"o #nit> means an) business entit) en(a(e& inmanu-actu"in( o" t"a&in( o- (oo&s, ca""ia(e o- (oo&s o"%assen(e"s, un&e"takin( const"uction o"ks, %"o$i&in(se"$ices as a skille& o" unskille& o"kman o" %"o$i&in( an)othe" se"$ices hatsoe$e", he"e the in$estment o- the entit)in %lant, machine") o" an) othe" e;ui%ment o" assets &oes notecee& tent) '$e lakhs "u%ees.

E@#3&&'!? An) !ic"o nte"%"ise as &e'ne& in sub clause*i+ o- the clauses *a+ an& *b+ o- sub section *1+ o- the section E

o- the !ic"o mall an& !e&ium nte"%"ises De$elo%ment Act,00 shall be &eeme& to be !ic"o #nit -o" the %u"%oses o- thisAct.

() MUDRA B&> -$&* '$ Mc%! U'* D$$3!#-$'&

R$8&c$ A/$c+ (MUDRA) B&> $*'&63*$$%

*$c'! : ! '* Ac'.

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[Document title]

1 o- 1G81.

(>)=Cational Bank> means the Cational Bank -o" A("icultu"ean& Ru"al De$elo%ment establishe& un&e" section 3 o- theCational Bank -o" A("icultu"e an& Ru"al De$elo%ment Act,1G81?

(3) Hnoti'cationH means a noti'cation %ublishe& in theOcial 7a9ette?

(-) =%"esc"ibe&> means %"esc"ibe& b) "ules ma&e un&e" thisAct?

1 o- 1GE.

()=Re(ional Ru"al Bank> means a Re(ional Ru"al Bankestablishe& un&e" sub2section*1+ o- section 3 o- the Re(ionalRu"al Banks Act, 1GE?

(!)="e(ulations> means "e(ulations ma&e b) the Rese"$eBank?

o- 1G3. (#)HRese"$e BankH means the Rese"$e Bank o- In&ia

constitute& un&e" section 3 o- the Rese"$e Bank o- In&ia Act,1G3?

*;+ the mall In&ust"ies De$elo%ment Bank o- In&ia meansthe mall In&ust"ies De$elo%ment Bank o- In&ia constitute&un&e" the mall In&ust"ies De$elo%ment Bank o- In&ia Act, 1G8G.

o- 1G3.10 o- 1GG.18 0- 013.1 o- 1G81.

*+Jo"&s an& e%"essions use& an& not &e'ne& in this Act but&e'ne& in the Rese"$e Bank o- In&ia Act, 1G3, the Bankin(Re(ulation Act, 1GG, the 6om%anies Act, 013 an& the CationalBank -o" A("icultu"e an& Ru"al De$elo%ment Act, 1G81, shallha$e the same meanin(s "es%ecti$el) assi(ne& to them inthose Acts.

CHAPTER IIESTABLISHMENT OF THE MICRO UNITS DEVELOPMENT AND

REFINANCE AGENCY(MUDRA) BANK AND CAPITALTHEREOF


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[Document title]

:. E*'&63*-$' & c!%#!%&'! ! Mc%! U'*D$$3!#-$' & R$8&c$ A/$c+ (MUDRA) B&>?

*1+ Jith e:ect -"om such &ate as the 6ent"al 7o$e"nment ma),b) noti'cation, a%%oint, the"e shall be establishe& -o" the

%u"%oses o- this Act, a bank to be knon as the !ic"o #nitsDe$elo%ment an& Re'nance A(enc) *!#DRA+ Bank.

*+ !ic"o #nits De$elo%ment an& Re'nance A(enc) *!#DRA+Bank shall be a bo&) co"%o"ate ith the name a-o"esai& ha$in(%e"%etual succession an& a common seal ith %oe", subect tothe %"o$isions o- this Act, to ac;ui"e, hol& an& &is%ose o- %"o%e"t)an& to cont"act, an& ma), b) that name, sue an& be sue&.

*3+ The hea& oce o- the !ic"o #nits De$elo%ment an&

Re'nance A(enc) *!#DRA+ Bank shall be at Delhi o" at suchothe" %lace as the 6ent"al 7o$e"nment ma), b) noti'cation,s%eci-).

*+ The !ic"o #nits De$elo%ment an& Re'nance A(enc) *!#DRA+Bank ma) establish oces, b"anches o" a(encies at an) %lace inIn&ia.

. C'&3?

*1+ The autho"ise& an& %ai& u% ca%ital o- the !ic"o #nitsDe$elo%ment an& Re'nance A(enc) *!#DRA+ Bank shall be to

thousan& c"o"es o- "u%ees4

P%!$that the 6ent"al 7o$e"nment ma), in consultation iththe Rese"$e Bank, b) noti'cation, inc"ease the autho"i9e& ca%italu% to ten thousan& c"o"es o- "u%ees.

*+ The Boa"& ma), on such te"ms an& con&itions, as &ete"mine&b) it -"om time to time, issue the inc"ease& autho"i9e& ca%ital toRese"$e Bank, the 6ent"al 7o$e"nment, sche&ule& banks, %ublic'nancial institutions, housin( 'nance institutions o" such othe"

institutions, as ma) be a%%"o$e& b) the 6ent"al 7o$e"nment4

"o$i&e& that no inc"ease in the issue& ca%ital shall be ma&e insuch manne" that the Rese"$e Bank, the 6ent"al 7o$e"nment,%ublic secto" banks, %ublic 'nancial institutions o" othe"institutions one& o" cont"olle& b) the 6ent"al 7o$e"nment, hol&in a(("e(ate at an) time, less than '-t) one %e"cent o- the issue&ca%ital o- the !ic"o #nits De$elo%ment an& Re'nance A(enc)*!#DRA+ Bank.

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[Document title]

"*1+ $e") oce" o" othe" em%lo)ee o- the eistin( !#DRA

6om%an) @imite& *ece%tin( the mana(in( &i"ecto", the &e%ut)mana(in( &i"ecto" an& othe" &i"ecto"s+ in the em%lo)ment o- theeistin( !#DRA 6om%an) @imite& imme&iatel) be-o"e thea%%ointe& &a) shall, on -"om the a%%ointe& &a), become anoce" o" othe" em%lo)ee, as the case ma) be, o- the !#DRABank, an& shall hol& his oce o" se"$ice the"ein b) the sametenu"e, at the same "emune"ation an& u%on the same te"ms an&con&itions an& ith the same "i(hts an& %"i$ile(es as to %ension,("atuit) an& othe" matte"s as he oul& ha$e hel& the same onthe a%%ointe& &a) i- the un&e"takin( o- the eistin( !#DRA6om%an) @imite& ha& not $este& In !#DRA Bank, an& shall

continue to &o so unless until his em%lo)ment in the !#DRABank, is te"minate& o" until his "emune"ation, te"ms o" con&itionsa"e &ul) alte"e& b) the !#DRA bank.*+ An) %e"son ho, on the a%%ointe& &a), is entitle& to o" is in"ecei%t o-, a %ension o" othe" su%e"annuation o" com%assionatealloance o" bene't -"om the eistin( !#DRA 6om%an) @imite&Bank o" an) %"o$i&ent, %ension o othe" -un& o" an) autho"itiesa&ministe"in( such -un& shall be entitle& to be %ai& b), an& to"ecei$e -"om, the !#DRA Bank o" an) %"o$i&ent, %ension o" othe"-un& o" an) autho"it) a&ministe"in( the same -un& the same

%ension, alloance o" bene't so lon( as he obse"$es thecon&itions on hich the %ension, alloance o" bene't as("ante&, an& i- an) ;uestion a"ises hethe" he has so obse"$e&such con&itions, the ;uestion shall be &ete"mine& b) the 6ent"al7o$e"nment an& the &ecision o- the 6ent"al 7o$e"nment the"eonshall be 'nal.*3+ Cotithstan&in( an)thin( containe& in the In&ust"ial Dis%uteAct, 1GE*1 o- 1GE+, o" an) othe" la -o" the time bein( in-o"ce, the t"ans-e" o- the se"$ices o- an) oce" o" othe"em%lo)ee o- the eistin( !#DRA 6om%an) limite&, -"om the bankto the !#DRA Bank shall not entitle such oce" o" othe"

em%lo)ee to an) com%ensation un&e" that Act o" othe" la, an&no such claim shall be ente"taine& b) an) cou"t, t"ibunal o" othe"autho"it).

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[Document title]

*+ An) %e"son hol&in( oce as mana(in( &i"ecto", De%ut)mana(in( &i"ecto", &i"ecto" o" membe" o- an) @ocal Boa"& o- theeistin( !#DRA 6om%an) @imite& imme&iatel) be-o"e a%%ointe&&a) shall be &eeme& to ha$e $acate& his oce such on the

a%%ointe& &a), an& not ithstan&in( an)thin( containe& in thisAct o" in an) othe" la -o" the time bein( in -o"ce o" an)a("eement o" cont"act, he shall not be entitle& to an)com%ensation -"om the eistin( !#DRA 6om%an) @imite& o" the!#DRA Bank -o" the loss o- oce o" -o" the %"ematu"ete"mination o- an) a("eement o" cont"act "elatin( to hisem%lo)ment, ece%t such %ension, com%ensation o" othe"bene't hich the !#DRA Bank ma) ("ant to him, ha$in( "e(a"&to hat that %e"son oul& ha$e "ecei$e& as an oce" o- theeistin( !#DRA 6om%an) @imite& i- this Act ha& not been%asse& an& o- he has "eti"e& -"om his em%lo)ment in the o"&ina")

cou"se.

CHAPTER IVMANAGEMENT OF MICRO UNITS DEVELOMENT

AND REFINANCE AGENCY ( MUDRA) BANK

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[Document title]

. M&&/$-$'. " *1+ The (ene"al su%e"inten&ence, &i"ectionan& mana(ement o- the a:ai"s an& business o- the !ic"o #nitsDe$elo%ment an& Re'nance A(enc) *!#DRA+ Bank shall $est inthe Boa"& o- Di"ecto"s, hich shall ee"cise all %oe"s an& &o all

acts an& thin(s, hich ma) be ee"cise& o" &one b) the !ic"o#nits De$elo%ment an& Re'nance A(enc) *!#DRA+ Bank.

*+ ubect to the %"o$isions o- this Act, the Boa"&, in &ischa"(in(its -unctions, shall act on business %"inci%les ith &ue "e(a"& to%ublic inte"est.

*3+ ubect to the %"o$isions o- sub section *1+ an& sa$e asothe"ise %"o$i&e& in the "e(ulations ma&e un&e" this Act,2 *a+ The 6hai"man, i- he is a hole2time &i"ecto" o" i- he ishol&in(

oces both as the6hai"man an& the !ana(in( Di"ecto",o" *b+ The !ana(in( Di"ecto", i- the 6hai"man is not ahole2time

&i"ecto", o" i- the 6hai"man bein( a hole2time &i"ecto" is absent?shall also ha$e %oe"s o- (ene"al su%e"inten&ence, &i"ection an&mana(ement o- the a:ai"s an& business o- the !ic"o #nitsDe$elo%ment an& Re'nance A(enc) *!#DRA+ Bank an& ma) alsoee"cise all %oe"s an& &o all acts an& thin(s hich ma) be

ee"cise& o" &one b) the !#DRA Bank an& shall act on business%"inci%les ith &ue "e(a"& to %ublic inte"est.

*+The !ana(in( Di"ecto" shall, in the &ischa"(e o- his %oe"san& -unctions, -ollo such &i"ections as the 6hai"man ma) (i$e.

*5+In the &ischa"(e o- its -unctions un&e" this Act, the !ic"o #nitsDe$elo%ment an& Re'nance A(enc) *!#DRA+ Bank shall be(ui&e& b) such &i"ections in matte"s o- %olic) in$ol$in( %ublicinte"est as the 6ent"al 7o$e"nment, in consultation ith theRese"$e Bank, o" the Rese"$e Bank, ma) (i$e in "itin(.

G


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[Document title]

3G o- 1G8G.

53 o- 1G8E.

;. B!&% ! D%$c'!%*." The Boa"& o- Di"ecto"s o- the !ic"o#nits De$elo%ment an& Re'nance A(enc) *!#DRA+ Bank shallconsist o- the -olloin(, namel)42

*a+ a 6hai"man an& a !ana(in( Di"ecto" to be a%%ointe& b) the6ent"al 7o$e"nmentP%!$ that the same %e"son ma) be a%%ointe& as 6hai"manan& !ana(in( Di"ecto"?

*b+ th"ee oce"s, not belo the "ank o- Noint ec"eta") to the7o$e"nment o- In&ia, one each -"om the De%a"tment o- Financiale"$ices. !inist") o- Finance, the !inist") o- Ru"al De$elo%mentan& the !inist") o- !ic"o mall an& !e&ium nte"%"ises '! 6$!-&'$ 6+ '$ C$'%&3 G!$%-$'.

*c+ an oce", not belo the "ank o- an ecuti$e Di"ecto" o- theRese"$e Bank, '! 6$ !-&'$ 6+ '$ R$*$%$ B&>.

*&+ an oce", not belo the "ank o- an ecuti$e Di"ecto" o- themall In&ust"ies De$elo%ment Bank o- In&ia '! 6$ !-&'$

6+ '$ S-&33 I*'%$* D$$3!#-$' B&> ! I&.

*e+ an oce", not belo the "ank o- an ecuti$e Di"ecto" o- theCational Bank &ealin( ith mic"o 'nance, '! 6$ !-&'$ 6+'$ N&'!&3 B&>.

*-+ an oce", not belo the "ank o- an ecuti$e Di"ecto" o- theCational ousin( Bank establishe& un&e" the Cational ousin(

BankAct, 1G8E '! 6$ !-&'$ 6+ '$ N&'!&3 H!*/ B&>.

*(+ not mo"e than -ou" %e"sons, o- hom at least to shall beomen, '! 6$ !-&'$ 6+ '$ C$'%&3 G!$%-$' -"omamon(st %e"sons ith e%e"ience in the feld obankin(, "u"alc"e&it o" mic"o 'nance o" the "e%"esentati$es o- mic"o 'nanceinstitutions o" sche&ule& banks o" an) othe" institutions %"o$i&in(

mic"o 'nance se"$ices.

*h+ not mo"e than to %e"sons belon(in( to &isa&$anta(e&sections o- the %eo%le ho a"e bene'cia"ies o- mic"o 'nancialse"$ices nominate& b) the el-2Re(ulato") O"(ani9ation o- the!ic"o Finance Institutions.

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[Document title]

. T$%- ! !c$ ! C&%-&, M&&// D%$c'!% &!'$% %$c'!%*, *$%c$ c!'!*, $'c." *1+ The 6hai"manan& the !ana(in( Di"ecto" shall hol& oce -o" such te"m, notecee&in( '$e )ea"s an& shall "ecei$e such sala") an&

alloances an& be (o$e"ne& b) such te"ms an& con&itions o-se"$ice as the 6ent"al 7o$e"nment ma), in consultation ith theRese"$e Bank, s%eci-) an& shall be eli(ible -o" "e2a%%ointment4

P%!$that the 6hai"man o", as the case ma) be, the!ana(in( Di"ecto" shall, notithstan&in( the e%i"ation o- histe"m, continue to hol& oce until his successo" ente"s u%on hisoce.

*+ The &i"ecto"s "e-e""e& to in clauses o- sub2section *b+ to *h+ o-section 8 shall hol& oce -o" a te"m o- th"ee )ea"s4

*3+ The 6ent"al 7o$e"nment ma), in consultation ith theRese"$e Bank, "emo$e the 6hai"man o" the !ana(in( Di"ecto", o"an) othe" &i"ecto" "e-e""e& to in sub2section *+, at an) timebe-o"e the e%i") o- his te"m o- oce a-te" (i$in( him a"easonable o%%o"tunit) o- shoin( cause a(ainst the %"o%ose&"emo$al.

*+ Cotithstan&in( an)thin( containe& in sub2section *1+ an&*3+, the 6ent"al 7o$e"nment, in consultation ith the Rese"$eBank, shall ha$e the "i(ht to te"minate the te"m o- oce o- the

6hai"man o", as the case ma) be, the !ana(in( Di"ecto", at an)time be-o"e the e%i") o- the te"m s%eci'e& un&e" sub2section*1+, b) (i$in( him notice o- not less than th"ee months in "itin(o" th"ee months sala") an& alloances in lieu the"eo- an& the6hai"man o" the !ana(in( Di"ecto", as the case ma) be, shallalso ha$e the "i(ht to "elin;uish his oce at an) time be-o"e thee%i") o- the te"m s%eci'e& un&e" sub2section *1+, b) (i$in( tothe 6ent"al 7o$e"nment notice o- not less than th"ee months in"itin( o" th"ee months sala") an& alloances in lieu the"eo-.

*5+ The &i"ecto"s shall be %ai& such -ees an& alloances as ma)be %"esc"ibe& -o" atten&in( the meetin(s o- the Boa"& o" o- an)o- its committees an& -o" atten&in( to an) othe" o"k o- the!ic"o #nits De$elo%ment an& Re'nance A(enc) *!#DRA+ Bank.

P%!$that no such -ee shall be %a)able to an) &i"ecto", hois an ocial o- the 7o$e"nment o" a &i"ecto" nominate& un&e"clauses *b+ to *h+ o- section 8.

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[Document title]

10. D*&38c&'!*." Co %e"son shall be a &i"ecto" o- theBoa"&, i- he2*a+ is, o" becomes o- unsoun& min& an& has been so &ecla"e&b) a com%etent cou"t? o"

*b+ is o" has been con$icte& o- an) o:ence hich, in theo%inion o- the 6ent"al 7o$e"nment, in$ol$es mo"al tu"%itu&e?o"*c+ is, o" at an) time has been, a&u&icate& as insol$ent o" hassus%en&e& %a)ment o- his &ebts o" has com%oun&e& ith hisc"e&ito"s? o"*&+ has, -o" an) "eason, been "emo$e& o" &ismisse& -"om these"$ice o- 2 *i+ the 7o$e"nment, o" *ii+ the Rese"$e Bank, the tate Bank o" an) othe" bank, o" *iii+ an) %ublic 'nancial institution, o" state 'nancial

co"%o"ation, o" *i$+ an) othe" co"%o"ation one& o" cont"olle& b) the7o$e"nment.

11. V&c&'! & %$*/&'! ! !c$ 6+ %$c'!%*."*1+ I- a &i"ecto"2

*a+ becomes subect to an) o- the &is;uali'cations mentione&in section 8? o"*b+ is absent ithout lea$e o- the Boa"& -o" th"ee o" mo"econsecuti$e meetin(s the"eo-,his seat shall the"eu%on become $acant.

*+ An) &i"ecto" ma) "esi(n his oce b) (i$in( notice the"eo- in"itin( to the autho"it) that a%%ointe& o", as the case ma) be,nominate& him an& on his "esi(nation bein( acce%te& b) suchautho"it) o" i- his "esi(nation is not soone" acce%te&, on thee%i") o- th"ee months -"om the "ecei%t the"eo- b) sucha%%ointin( autho"it), he shall be &eeme& to ha$e $acate& hisoce.

12. C&*&3 &c&c+ '$ !c$ ! C&%-& !% M&&//D%$c'!%?"

I- the 6hai"man, o" as the case ma) be, the !ana(in( Di"ecto", isb) in'"mit) o" othe"ise "en&e"e& inca%able o- ca"")in( out his&uties o" is absent on lea$e o" othe"ise, in ci"cumstances notin$ol$in( the $acation o- his a%%ointment, the 6ent"al7o$e"nment ma), a%%oint anothe" %e"son to act in his %lace&u"in( his absence.

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1:.M$$'/* ! B!&%?"*1+ The Boa"& shall meet at such times an& %laces an& shallobse"$e such "ules o- %"oce&u"e in "e(a"& to the t"ansaction o-business at its meetin(s, as ma) be %"esc"ibe&.

*+ The 6hai"man, o", i- -o" an) "easons he is unable to atten& ameetin( o- the Boa"&, the !ana(in( Di"ecto", o", in the e$ent o-both the 6hai"man an& the !ana(in( Di"ecto" bein( unable toatten& a meetin(, an) othe" &i"ecto" nominate& b) the 6hai"manin this behal- an& in the absence o- such nomination, an) &i"ecto"electe& b) the &i"ecto"s %"esent -"om amon( themsel$es at themeetin(, shall %"esi&e at the meetin(.

*3+ All ;uestions hich come u% be-o"e an) meetin( o- the Boa"&shall be &eci&e& b) a mao"it) o- $otes o- the &i"ecto"s %"esentan& $otin(, an& in the e$ent o- an) e;ualit) o- $otes, the6hai"man, o", in his absence, the %e"son %"esi&in(, shall ha$e asecon& o" castin( $ote.

1.E@$c'$ c!--''$$ & !'$% c!--''$$*?"*1+ The Boa"& ma) constitute an ecuti$e 6ommittee consistin(o- such numbe" o- &i"ecto"s as ma) be %"esc"ibe&.

*+ The ecuti$e 6ommittee shall &ischa"(e such -unctions asma) be %"esc"ibe&, o", as ma) be &ele(ate& to it, b) the Boa"&.

*3+ The Boa"& ma) constitute such othe" committees, hethe"consistin( holl) o- &i"ecto"s o" holl) o- othe" %e"sons o" %a"tl)o- &i"ecto"s an& %a"tl) o- othe" %e"sons as it thinks 't -o" such%u"%oses, as it ma) &eci&e an& an) committee so constitute&shall &ischa"(e such -unctions as ma) be &ele(ate& to it b) theBoa"&.

*+ The ecuti$e 6ommittee o" an) othe" committee constitute&un&e" this section shall meet at such times an& %laces an& shallobse"$e such "ules o- %"oce&u"e in "e(a"& to t"ansaction o-

business at its meetin(s, as ma) be %"esc"ibe&.

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15. D%$c'!% ! B!&% !% -$-6$% ! c!--''$$ '$%$! !''! #&%'c#&'$ -$$'/* c$%'& c&*$*." An) &i"ecto" o-the Boa"& o" an) membe" o- a committee, ho has an) &i"ect o"in&i"ect %ecunia") inte"est in an) matte" comin( u% -o"

consi&e"ation at a meetin( o- the Boa"& o" a committee the"eo-,shall, as soon as %ossible a-te" "ele$ant ci"cumstances ha$ecome to his knole&(e, &isclose the natu"e o- his inte"est at suchmeetin( an& the &isclosu"e shall be "eco"&e& in the minutes o-the Boa"&, o" the committee, as the case ma) be, an& the&i"ecto" o" membe" shall not take an) %a"t in an) &elibe"ation o"&ecision o- the Boa"& o" the committee ith "es%ect to thatmatte".

CHAPTER V

BUSINESS AND FUNCTIONS OF MICRO UNITSDEVELOPMENT

AND REFINANCE AGENCY (MUDRA) BANK

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[Document title]

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[Document title]

1. *1+ The !#DRA Bank shall %e(ulate, %"omote an& ensu"eo"&e"l) ("oth o- the mic"o 'nance *'''!* & '&>$-$&*%$*as it &eems 't, -o" the %u"%ose o- %"omotin( 'nancialinclusion th"ou(h such institutions.

*+ Jithout %"eu&ice to the (ene"alit) o- the -o"e(oin( %"o$isionscontaine& in sub2section *1+, the %oe"s an& -unctions shallinclu&e2

*a+ *#$c+/the secto" "elate& benchma"ks an& %e"-o"mancestan&a"&s %e"tainin( to metho&s o- o%e"ation, -ai" an&"easonable metho&s o- "eco$e"), mana(ement an& (o$e"nanceinclu&in( mo&el co&es -o" con&uct o- acti$ities o- mic"o 'nanceinstitutions?

*b+ -o"mulatin( schemes -o" @en&in( o" %"o$i&in( (ua"antees to

the mic"o 'nance institutions to &i:e"ent cate(o"ies o- mic"ounits such as ole %"o%"ieta") business o- in&i$i&uals, el-2hel%("ou%s, Noint liabilit) ("ou%s an& an) othe" ("ou% o- bene'cia"ies?

*c+ -acilitatin( the &e$elo%ment o- c"e&it "atin( no"ms o" "atin(no"ms -o" othe" %u"%oses -o" !ic"o 'nance institutions?

*&+ s%eci-)in( the -o"m an& manne" o- books o- account to bemaintaine& b) mic"o 'nance institutions?

*e+ s%eci-)in( the -o"m an& manne" o- accountin( o- businesso%e"ations o- mic"o 'nance institutions an& au&itin( stan&a"&s"elatin( the"eto?

*-+ callin( -o" in-o"mation an& &ata -"om mic"o 'nance institutions-o" maintainin( an a%%"o%"iate &atabase in the %ublic &omain"elatin( to mic"o 'nance se"$ices an& &isseminatin( the sameth"ou(h a national &issemination neto"k.*(+ -acilitatin( &e$elo%ment o- mic"o 'nance institutions,en(a(e& in mic"o 'nance se"$ices th"ou(h t"ainin( an& ca%acit)buil&in( measu"es?*h+ -acilitatin( c"e&it in-o"mation s)stem -o" bene'cia"ies o-mic"o 'nance se"$ices %"o$i&e& b) mic"o 'nance institutions.*i+ %"omotin( custome" e&ucation o- all nstitutions en(a(e& inmic"o 'nancial se"$ices -o" ("eate" aa"eness an& -o" economicem%oe"ment o- mic"o 'nance clients?*+ su%%o"tin( "esea"ch, 'el& "esea"ch, &ocumentation an&&issemination the"eo- "elatin( to mic"o 'nance secto"?*k+ coo"&inatin( ith othe" a(encies -o" o"&e"l) ("oth an&&e$elo%ment o- institutions en(a(e& in the mic"o 'nancialse"$ices?*l+ &ocumentin( an& &isseminatin( in-o"mation "elatin( to 6$*'#%&c'c$*ith a $ie to ensu"in( %"o$ision o- mic"o 'nancialse"$ices at an a:o"&able cost to eli(ible clients?*m+ %e"-o"m such othe" -unctions as ma) be %"esc"ibe&.

Functionsan&%oe"s o-!#DRA

Bank.

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[Document title]

CHAPTER VIIREGISTRATION OF MICRO FINANCE INSTITUTIONS

Re(ist"ation

o- mic"o'nanceinstitutions.

1;. N!'4'*'&/ &+'/ c!'&$ T$ R$*$%$

B&> ! I& Ac', 1: !% &+ !'$% 3&4 !% '$ '-$6$/ !%c$ & *&$ &* !'$%4*$ #%!$ '* Ac',! -c%! 8&c$ *'''! &'$% '$ c!--$c$-$' !'* Ac', shall commence o" ca"") on the acti$it) o- %"o$i&in(mic"o 'nance se"$ices ithout obtainin( a ce"ti'cate o-"e(ist"ation un&e" this Act.

A%%lication-o""e(ist"ation.

1. *1+ A mic"o 'nance institution, hich inten&s to c&%%+ !'$ &c''+ !%"o$i&in( mic"o 'nance se"$ices, shall make ana%%lication -o" "e(ist"ation to the !#DRA Bank in such -o"m an&manne" alon( ith such -ee as ma) be s%eci'e& b) "e(ulations.

P%!$that an) mic"o 'nance institution, in eistence at thecommencement o- this Act, en(a(e& in %"o$i&in( mic"o 'nancese"$ices 6$!%$ *c c!--$c$-$', shall 4' th"eemonths %!- '$ &'$ ! such commencement, make ana%%lication to the !#DRA Bank -o" "e(ist"ation in the -o"m an&manne" as s%eci'e& un&e" sub2section *1+.

(2) Cotithstan&in( an)thin( containe& in sub2section *1+, an)com%an) "e(iste"e& as a non2bankin( 'nance com%an) ith theRese"$e Bank o- In&ia un&e" the %"o$isions o- 6ha%te" III2B o- theRese"$e Bank o- In&ia Act, 1G3, an& classi'e& as mic"o 'nance

institution an& en(a(e& in eten&in( mic"o 'nancial se"$icesshall continue to &o so an& com%l) ith the te"ms an& con&itionso- its "e(ist"ation an& an) "ules, "e(ulations, &i"ecti$es an&(ui&elines issue& b) the Rese"$e Bank to the non2bankin('nance com%anies on the &ate o- commencement o- this Act,subect to such mo&i'cations that ma) be ma&e -"om time totime an& &3*! such othe" "ules, "e(ulations, &i"ecti$es an&(ui&elines o- the !#DRA Bank as ma) be -&$ !% issue& b)the !#DRA Bank !% !% '!the !ic"o 'nance institutions, un&e"this Act.

o- 1G3.

Explanation.9 F!% '$ #%#!*$ ! '* *$c'!, ' *

c3&%8$ '&'"(&) '$ &c''+ ! #%!/ -c%! 8&c$ *$%c$*

6+ -c%! 8&c$ *'''!* %$/*'$%$ $% '*Ac'7 !%

(6) $@'$/ ! -c%! 8&c$ *$%c$* 6+ &+ !"6&>/ 8&c$ c!-#&+,

*&33 6$ %$/3&'$ & *#$%*$ &* & &c''+*-3&% '! !"6&>/ 8&c&3 &c''+.

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20. *1+ The !#DRA Bank ma), -o" the %u"%ose o- ("ant o-ce"ti'cate o- "e(ist"ation, satis-) itsel- that* !&cc!'* & !'$% %$3$&' !c-$'* $% *6"*$c'!(2) ! *$c'! 257 !%() &3* '! c!-#3+ 4' %$c'$* *'#3&'$ '$#%!6'!%+ !%$% #&**$ $% *$c'! 2;7

*+ Be-o"e cancellin( the ce"ti'cate o- "e(ist"ation o- an) !ic"o'nance institution un&e" sub2section *1+, the !#DRA Bank shall%"o$i&e a "easonable o%%o"tunit) o- bein( hea"& to such mic"o'nance institution.22. *1+ A mic"o 'nance institution a(("ie$e& b) an o"&e" o-"eection o- an a%%lication -o" ("ant o- ce"ti'cate o- "e(ist"ationun&e" section 1G, o" cancellation o- ce"ti'cate o- "e(ist"ationun&e" section 0, o" an) action taken b) the !#DRA Bank un&e"sub2section *+ o- section E, ma) %"e-e" an a%%eal to the 6ent"al7o$e"nment o" such othe" autho"it), as ma) be %"esc"ibe&,ithin a %e"io& o- sit) &a)s -"om the &ate on hich such o"&e" is

communicate& to the mic"o 'nance institution.

A%%eala(ainstce"taincases.

*+ The a%%eal shall be 'le& in such -o"m an& in such manne", asma) be %"esc"ibe&.*3+ The &ecision o- the 6ent"al 7o$e"nment o" the autho"it),he"e an a%%eal has been %"e-e""e& un&e" sub2section *1+, shallbe 'nal4

P%!$ that be-o"e makin( an) o"&e" o- "eection o-a%%eal, such mic"o 'nance institution shall be (i$en a "easonableo%%o"tunit) o- bein( hea"&.

1G


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[Document title]

Accounts an&balancesheet.

2:. At the close o- each 'nancial )ea", e$e") mic"o 'nanceinstitution shall %"e%a"e, ith "e-e"ence to that )ea", in "es%ect o-all se"$ices t"ansacte& b) it, a balance sheet, %"o't an& lossaccount o" an income an& e%en&itu"e account as on the last

o"kin( &a) o- the 'nancial )ea", in such -o"m as ma) bes%eci'e& b) "e(ulations.

Au&it. 2.The balance sheet, %"o't an& loss account o" an income an&e%en&itu"e account %"e%a"e& in acco"&ance ith section 1G shallbe au&ite& b) a %e"son &ul) ;uali'e& un&e" la -o" the timebein( in -o"ce to be an au&ito" o- com%anies -o"me& an&"e(iste"e& un&e" the 6om%anies Act, 013, o" an au&ito" -"om thelist o- 6ha"te"e& Accountants o" othe" ;uali'e& %e"sons a%%"o$e&b) the !#DRA Bank.

18 o- 013

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*c+ an) othe" hich the au&ito" consi&e"s necessa") to beb"ou(ht to the notice o- eli(ible clients an& the Rese"$e Bankto ensu"e (oo& (o$e"nance an& t"ans%a"enc) in the businesso- the mic"o 'nance institution conce"ne&.

(:) J$%$ &+ ! '$ -&''$%* %$$%%$ '! c3&*$ (&) &(6) ! *6"*$c'! (2) * &*4$%$ $/&'$ !% 4'&38c&'!, '$ &'!%* %$#!%' *&33 *'&'$ '$ %$&*!*!% '$ *&-$.

2. a$e as othe"ise %"o$i&e& in this Act, e$e") mic"o 'nanceinstitution, at the commencement o- this Act, shall, ithinninet) &a)s -"om the &ate o- such commencement, 'le iththe !#DRA Bank a "etu"n containin( %a"ticula"s o- itsacti$ities in such -o"m an& manne" an& the"ea-te" at suchinte"$als as ma) be s%eci'e& b) "e(ulations.

Retu"ns tobe 'le& b)mic"o'nanceinstitutions.

oe" toissue&i"ections tomic"o 'nanceinstitutions

2;. *1+ I- the !#DRA Bank is satis'e& that, in the %ublic inte"esto" to %"e$ent the a:ai"s o- an) mic"o 'nance institution bein(con&ucte& in a manne" &et"imental to the inte"est o- theclients a$ailin( mic"o 'nance se"$ices o" in a manne"%"eu&icial to the inte"est o- the mic"o 'nance institution, it isnecessa") o" e%e&ient so to &o, it ma) (i$e &i"ections to aclass o" classes o" all mic"o 'nance institutions (ene"all), o"to an) mic"o 'nance institution in %a"ticula" as it &eeme& 'tan& the mic"o 'nancial institution o" mic"o 'nance institutionsas the case ma) be shall be boun& to com%l) ith such

&i"ections.*+ In %a"ticula" an& ithout %"eu&ice to the (ene"alit) o- the-o"e(oin( %oe"s, such &i"ections ma) %"o$i&e -o" all o" an) o-the -olloin( matte"s, namel)4 2 *a+ etent o- &e%lo)ment o- assets -o" %"o$i&in( mic"o

'nance se"$ices an& %"o%o"tion o- clients a$ailin( suchse"$ices , necessa") to classi-) an) institution as !ic"o'nance institution?*b+ ceilin( on amount o- mic"o c"e&it -acilities an& the numbe"o- in&i$i&ual clients to hom such mic"o c"e&it -acilities ma)be %"o$i&e& b) an) mic"o 'nance institution?

*c+ tenu"e o- mic"o c"e&it -acilities (i$en to clients an& othe"te"ms an& con&itions -o" hich mic"o c"e&it -acilities, can be(i$en, ma"(in ca%s an& %e"io&icit) o- "e%a)ment sche&ules?*&+ le$) o- %"ocessin( -ees, inte"est, li-e insu"ance %"emiuman& othe" te"ms "elatin( to mic"o c"e&it -acilities, the ceilin(on the %e"centa(e o- ma"(in to be maintaine& b) a mic"o'nance institution?*e+ the maimum annual %e"centa(e "ate hich ma) becha"(e& b) a mic"o 'nance institution on the mic"o c"e&it-acilities ("ante& to an) client?

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*-+ the locations he"e mic"o c"e&it -acilities ma) besanctione&

an& &isbu"se& b) mic"o 'nance institutions? *(+ mic"o 'nance institutions to become membe"s o- 6"e&it

In-o"mation Bu"eaus that ma) be set u% -o" the mic"o'nance

secto"? *h+ obse"$in( co&e o- con&uct -o"mulate& b) an) o"(ani9ationo-

mic"o 'nance institution "eco(ni9e& b) the !#DRA Bank an&set

u% ("ie$ance "e&"essal mechanism -o" thei" clients as"e;ui"e&

b) such o"(ani9ation?*i+a 6lient "otection 6o&e an& its acce%tance an& obse"$ance

b) mic"o 'nance institutions ?

*+ mic"o 'nance institutions to achie$e bette" cont"olsim%li'cation o- %"oce&u"es an& "e&uction o- costs b) use o-in-o"mation technolo()?

*k+ the minimum net2o"th o- mic"o 'nance institutions consi&e"in( thei" si9e o- o%e"ations an& othe" "ele$ant

%a"amete"s?

*l+ no"ms -o" co"%o"ate (o$e"nance to be obse"$e& b) mic"o'nance institutions?

*m+ %"u&ential no"ms "elatin( to income "eco(nition,accountin( stan&a"&s, %"o$isionin( -o" ba& an& &oubt-ul&ebts, ca%ital a&e;uac) base& on "isk ei(hts -o" assets an&&e%lo)ment o- -un&s?

*n+ &isclosu"e o- assi(nments o" secu"iti9ation o- assets as alsoassets assi(ne& ith "ecou"se o" ith a""an(ement as a(ent-o" collection o- loan installments?

*o+ "aisin( o- %"e-e"ence sha"e ca%ital o" othe" ca%ital b) mic"o'nance institution?

*%+ ("ant o- "eco(nition to an) sel-2"e(ulato") oo"(ani9ation o-

mic"o 'nance institutions -o" ecient con&uct o- the businesso- mic"o 'nance institution. *;+ such othe" &i"ections as ma) be s%eci'e& b) "e(ulations.

!a"(ins notto be inecess o- maimumlimit.

2. *1+ A mic"o 'nance institution en(a(e& in the acti$it) o-%"o$i&in( mic"o c"e&it -acilities shall not collect a ma"(inhich is in ecess o- the -&@-- 3-' '$%$!, &*ma)be s%eci'e& b) the !#DRA Bank b) "e(ulations -"om time totime.


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*+ The !#DRA Bank ma) s%eci-), b) "e(ulations, ma"(in un&e"sub2section *1+ -o" mic"o 'nance institutions (ene"all) o" -o" aclass o- mic"o 'nance institutions o" -o" an) mic"o 'nanceinstitution in %a"ticula", c!*$%/ '$ *=$ ! '$%

!#$%&'!*, %*> &**!c&'$ 4' *c !#$%&'!* &*c !'$% #&%&-$'$%*, &* ' $$-* 8'.

*3+ A mic"o 'nance institution en(a(e& in the acti$it) "e-e""e& insub2section *1+ shall con$e) to e$e") c3$' !%bo""oe" theannual %e"centa(e "ate com%"isin( o- the annual inte"est"ate, %"ocessin( -ees o" an) othe" cha"(e o" -ee le$ie& b) themic"o 'nance institution an& inco"%o"ate the same &istinctl)an& %"ominentl) in the loan &ocument o- '$ c3$' !% thebo""oe", in the sanction lette" (i$en to the c3$' !%bo""oe", &* '$ c&*$ -&+ 6$.

*+ A mic"o 'nance institution shall obtain -"om the tatuto")

Au&ito"s a ce"ti'cate that the ma"(in a$ailable to, an&"eali9e& b), the mic"o 'nance institution &oes not ecee& themaimum 3-' s%eci'e& b) the !#DRA Bank & that themic"o 'nance institution has com%lie& ith the "e;ui"ementso- sub2sections *1+ an& *+.

18 o- 013

:0. *1+ Cotithstan&in( an)thin( to the cont"a") containe& insection 10 o- the 6om%anies Act, 013, the !#DRA Bank *&33,at an) time o" on bein( &i"ecte& so to &o b) the 6ent"al7o$e"nment cause an ins%ection o- an) mic"o 'nance institutionan& its books an& accounts an& the !#DRA Bank shall su%%l) to

the mic"o 'nance institution a co%) o- the "e%o"t o- suchins%ection.

*+ Jithout %"eu&ice to the %"o$isions o- sub2section *1+, the!#DRA Bank ma), cause a sc"utin) o- the a:ai"s o- an) mic"o'nance institution an& its books an& accounts.

*3+ A co%) o- the "e%o"t o- the sc"utin) shall be -u"nishe& to themic"o 'nance institution, i- the mic"o 'nance institutionmakes a "e;uest -o" the same o" i- an) a&$e"se action iscontem%late& a(ainst the mic"o 'nance institution on the

basis o- the sc"utin).*+ It shall be the &ut) o- e$e") %e"son ho is a &i"ecto", t"ustee

o" a membe" o- !ana(in( 6ommittee, mana(e", sec"eta") o"othe" oce" o" em%lo)ee o- the mic"o 'nance institution to%"o&uce be-o"e an) oce" autho"i9e& to make an ins%ection,all such books o- account, "eco"&s an& othe" &ocuments incusto&) o" %oe" o- such %e"son to -u"nish an) statement o"in-o"mation "elatin( to a:ai"s o- the mic"o 'nance institution,as the ins%ectin( autho"it) ma) "e;ui"e ithin such time, asma) be s%eci'e&.

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*5+ An) oce" makin( an ins%ection un&e" sub2section *1+ o" asc"utin) un&e" sub2section *+ ma) eamine on oath an)&i"ecto", t"ustee o" a membe" o- !ana(in( 6ommittee,!ana(e", ec"eta") o" othe" oce" o" em%lo)ee o- the !ic"o

'nance institution in "elation to its business, an& ma)a&ministe" an oath acco"&in(l).

*+ I- the !#DRA Bank, a-te" consi&e"in( the "e%o"t o- ins%ectionun&e" sub2section *1+ o" sc"utin) un&e" sub2section *+,is o-the $ie that the a:ai"s o- an) mic"o 'nance institution a"ebein( con&ucte& to the &et"iment o- its clients, it ma) a-te"(i$in( such o%%o"tunit) to the mic"o 'nance institution tomake "e%"esentation in connection ith the "e%o"t, take suchaction as it &eems 't inclu&in( "emo$al o- an) oce", ocebea"e" o" mana(in( committee o- the mic"o 'nanceinstitution o" %"ohibitin( the mic"o 'nance institution -"om

%"o$i&in( mic"o 'nance se"$ices -o" such %e"io& as the!#DRA Bank ma) &eem 't, in the manne" as ma) bes%eci'e& b) "e(ulations.

"ohibito")o"&e".

:1. *1+ I- on ins%ection o" %e"usal o- annual accounts o" an)"etu"ns submitte& b) an) mic"o 'nance institution, the!#DRA Bank is satis'e& that acti$ities o- that mic"o 'nanceinstitution a"e bein( con&ucte& in a manne" %"eu&icial to theinte"est o- its clients o" membe"s o- the sel-2hel% ("ou% o" themic"o 'nance institution itsel-, the !#DRA Bank ma) %ass ano"&e" ithin sit) &a)s o- such ins%ection %"ohibitin( such

mic"o 'nance institution -"om %"o$i&in( the mic"o 'nancese"$ices, subect to such te"ms an& con&itions as ma) bes%eci'e& in such o"&e".

(2) I '$ #%!6'!%+ !%$%, '$ MUDRA B&> -&+, %$c''$ -c%! 8&c$ *'''! !' '! *$33, '%&*$%, c%$&'$c&%/$ !% -!%'/&/$ !% $&3 &+ -&$% 4' '*#%!#$%'+ & &**$'* 4'!' #%!% 4%''$ #$%-**! !'$ MUDRA B&> %/ '$ *6**'$c$ ! '$#%!6'!%+ !%$%. *3+ The !#DRA Bank ma), ("ant time to such mic"o 'nanceinstitution -o" takin( necessa") ste%s to com%l) ith the

&i"ections o- the o"&e" %asse& un&e" sub2section *1+.*+ The !#DRA Bank ma) ith&"a the 6ease an& Desist O"&e"

issue& un&e" sub2section *1+, i- the !#DRA Bank is satis'e&that mic"o 'nance institution has com%lie& ith the &i"ectionsissue& un&e" such o"&e".


25/33


[Document title]

:2. *1+ Co mic"o 'nance institution "e(iste"e& un&e" this Act%"o$i&in( mic"o 'nance se"$ices o" othe" se"$ices shall close itsacti$it) o" amal(amate ith othe" institutions, o" take o$e" an)othe" business o" its sha"ehol&in( o" &e2me"(e o" &i$i&e, o"

"est"uctu"e, o" othe"ise t"ans-e" the one"shi% o" cont"ol o- itsacti$it) o- %"o$i&in( mic"o 'nance se"$ice ithout %"io" a%%"o$alo- the MUDRA B&>?

P%!$ that be-o"e ("ant o- such a%%"o$al !#DRA Bank ma)call u%on the mic"o 'nance Institution to %"o&uce &ocuments an&sanctions o- a%%"o%"iate autho"it) to satis-) itsel- that %"o%ose&closu"e o" "est"uctu"in( is &one in acco"&ance ith the %"o$isionso- the la a%%licable to such mic"o 'nance institution.

6losin( o""est"uctu"in( o- business.

::. *1+ J'!' #%$c$ '! &+'/ c!'&$ &+!'$% 3&4 !% '$ '-$ 6$/ !%c$ #3c&63$ '! 4/

# ! &+ Mc%! 8&c$ *'''!, the !#DRA Bank, onbein( satis'e& that a mic"o 'nance institution< *a+ is unable to %a) its &ebt? o"

*b+&*b) $i"tue o- %"o$isions o- this Act become &is;uali'e& toca"") on the acti$it) o- mic"o 'nance institution? o"

*c+has -aile& to com%l) ith an) &i"ecti$es o" o"&e"s issue& b)the !#DRA Bank inclu&in( the 6ease an& Desist O"&e" o"othe"ise? o"

*&+the continuance o- the mic"o 'nance institution is&et"imental to %ublic inte"est o" to the inte"est o- the clients o-

the institution,

ma) 'le an a%%lication -o" in&in( u% o" an) othe" a%%lication b)hate$e" name calle& or closure o its activity, be-o"e thea%%"o%"iate autho"it) o" 6ou"t em%oe"e& to in& u% thebusiness o" acti$it) o- the mic"o 'nance institution un&e" the laa%%licable to such !ic"o 'nance institution4

P%!$ '&' 4$%$ the mic"o 'nance institution a(ainsthom a%%lication -o" in&in( u% is 'le& is also en(a(e& in an)othe" acti$it), the conce"ne& mic"o 'nance institution ma) be

%e"mitte& to continue such acti$it) an& "est"ict the in&in( u% o"closu"e o- the business onl) to the acti$it) o- %"o$i&in( mic"o'nancial se"$ices ith the a%%"o$al o- the conce"ne& autho"it) o"6ou"t.

Explanation.9F!% '$ #%#!*$ ! '* *$c'!, & -c%!8&c$ *'''! *&33 6$ $$-$ '! 6$ &63$ '! #&+ '*$6'*, ' &* %$*$ !% &* &3$ '! -$$' 4' 8$4!%>/ &+* &+ 3&43 $-& -&$ &' &+ ! '*!c$* !% 6%&c$* & '$ MUDRA B&> c$%'8$* 4%'/ '&' *c c!-#&+ * &63$ '! #&+ '* $6'.

Jin&in( u%%etition !%

!'$%#3c&'!.

5


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[Document title]

(2) An) autho"it) o" 6ou"t em%oe"e& to in& u% the businesso- the !ic"o 'nance institution, -&+ %ass *c !%$%* &* '$$-* 8'.

CHAPTER VIIIMICRO FINANCE DEVELOPMENT FUND

7"ants b)6ent"al7o$e"nment.

:. The 6ent"al 7o$e"nment ma), a-te" &ue a%%"o%"iation ma&eb) a"liament b) la in this behal-, ("ant such sum o- mone) asthat 7o$e"nment ma) think 't, '! '$ MUDRA B&> -o" bein(utili9e&-o" the %u"%oses s%eci'e& un&e" sub2section *3+o- section3.

Fun&. :5. *1+ The !#DRA Bank shall constitute a -un& to be calle& the!ic"o Finance De$elo%ment Fun& *he"ea-te" calle& Lthe Fun&M+an& the"e shall be c"e&ite& the"eto 2

*a+ all 7o$e"nment ("ants "ecei$e& an& -ees %a)able un&e" thisAct?

*b+ all sums that ma) be "aise& b) the !#DRA Bank -"om &ono"s,

institutions, othe" entities an& %ublic -o" the %u"%ose o- this

Act?*c+ an) inte"est o" othe" income "ecei$e& out o- in$estments

ma&e -"om the Fun& un&e" clause *c+ o- sub2section *3+?

*&+ the balance outstan&in( in the !ic"o Finance De$elo%ment

an& ;uit) Fun& maintaine& b) the Rese"$e Bank, be-o"e thecommencement o- this Act.*+ The Fun& shall be mana(e& b) the !#DRA Bank in suchmanne" as ma) be s%eci'e& b) "e(ulations &ul) a%%"o$e& b) theBoa"& o- Di"ecto"s o- the !#DRA Bank.

*3+ The Fun& shall be a%%lie&2

*a+ to %"o$i&e loans, "e'nance, ("ant, see& ca%ital o" an) othe"c"e&it -acilities to an) mic"o 'nance institution o" Bank o"'nancial institution o" an)othe" a(enc) hich the !#DRA Bank ma) b) "e(ulations

s%eci-)?*b+ to (i$e ("ants o" loans -o" t"ainin( an& ca%acit) buil&in( o-institutions en(a(e& in mic"o 'nance se"$ices an& %e"sonnelen(a(e& in %"omotin( an& %"o$i&in( mic"o 'nance se"$icesan& meetin( othe" e%en&itu"e "elate& to such t"ainin( an&ca%acit) buil&in( on such te"ms an& con&itions as ma) bes%eci'e& b) "e(ulations?

*c+ to in$est in e;uit) o" an) othe" -o"m o- ca%ital o" ;uasi2e;uit)

o- a !ic"o 'nance institution o" an) othe" a(enc) on suchte"ms

an& con&itions as ma) be s%eci'e& b) "e(ulations?


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[Document title]

*&+ to meet the necessa") e%enses in "elation to collection,anal)sis, &issemination o- in-o"mation "elatin( to mic"o

'nance,con&uct o- such "esea"ch, e%e"iments o" stu&ies as ma) be

s%eci'e&, an& to &esi(n, %"omote, an& %"o%a(ate such%"actices

as ma) be consi&e"e& con&uci$e to the ("oth o- mic"o'nance

se"$ices?*e+ to meet an) othe" e%enses as ma) be "e;ui"e& -o" the%"omotion o- mic"o 'nance se"$ices as the !#DRA Bank b)"e(ulations s%eci-)?

*-+ to meet an) othe" e%enses *ece%t sala"ies, alloancesan&

othe" "emune"ation o- oce"s an& othe" em%lo)ees+ o- the !#DRA Bank in connection ith &ischa"(e o- its -unctions as ma) be s%eci'e& b) the "e(ulations.:


28/33


[Document title]

*+ An) scheme to be -o"mulate& un&e" sub2section *1+ shall%"o$i&e -o" 2 *a+ natu"e o- ("ie$ance an& com%laints that ma) beente"taine&

b) the Ombu&sman?*b+%"oce&u"e -o" "e&"essal o- ("ie$ances an& com%laints?

*c+ an) othe" matte" that ma) be necessa") -o" e:ecti$e"e&"essal o- ("ie$ances.

CHAPTER OFFENCES AND PENALTIES

:;. *1+ I- an) %"o$ision o- this Act is cont"a$ene& o" i- an)&e-ault is ma&e in com%l)in( ith an) othe" "e;ui"ement o- thisAct o" o- an) "ules, "e(ulations o" o"&e"s o" &i"ections (i$en o"noti'cation issue& o" con&ition im%ose& the"eun&e", an) %e"son(uilt) o- such cont"a$ention o" &e-ault shall be %unishable ithim%"isonment -o" a te"m not ecee&in( to )ea"s o" ith 'nehich ma) eten& to '$e lakh "u%ees an& he"e, acont"a$ention o" &e-ault is a continuin( one, ith -u"the" 'ne,hich ma) eten& to ten thousan& "u%ees -o" e$e") &a) a-te"the '"st, &u"in( hich the cont"a$ention o" &e-ault continues.

6ont"a$ention o-%"o$isionso- Act,o"&e"s an&&i"ections.

*+ Jhoe$e" knoin(l) -ails to com%l) ith the %"o$isions o-section 18 o" an) o"&e" ma&e, o" the &i"ection issue&, b) the6ent"al 7o$e"nment o" othe" &'!%'+ $% '* Ac' shall be

%unishable ith 'ne hich ma) eten& to '$e lakh "u%ees an&he"e, a cont"a$ention o" &e-ault is a continuin( one, ith a-u"the" 'ne, hich ma) eten& to ten thousan& "u%ees -o" e$e")&a) a-te" the '"st, &u"in( hich the cont"a$ention o" &e-aultcontinues, o" ith im%"isonment -o" a te"m not ecee&in( to)ea"s o" ith both.

7i$in( -alsein-o"mation.

:. Jhoe$e", in an) a%%lication, &ecla"ation, "etu"n, statement,in-o"mation o" %a"ticula"s ma&e, "e;ui"e& o" -u"nishe& b) o"un&e" o" -o" the %u"%oses o- an) %"o$ision o- this Act, o" an) "ule,"e(ulation o" o"&e" o" &i"ection ma&e o" (i$en the"eun&e",ill-ull) makes a statement hich is -alse in an) mate"ial

%a"ticula"s knoin( it to be -alse o" ill-ull) omits to make amate"ial statement, shall be %unishable ith im%"isonment -o" ate"m hich ma) eten& to to )ea"s &shall also be liable to'ne hich ma) eten& to '$e lakh "u%ees an& he"e, acont"a$ention o" &e-ault is a continuin( one, ith -u"the" 'ne,hich ma) eten& to ten thousan& "u%ees -o" e$e") &a) a-te"the '"st, &u"in( hich the cont"a$ention o" &e-ault continues o"ith im%"isonment -o" a te"m not ecee&in( to )ea"s o" ithboth.

8


29/33


[Document title]

O:ences b)mic"o 'nanceinstitutions.

0. *1+ Jhe"e an o:ence un&e" this Act is committe&, the %e"sonho as in cha"(e o-, an& as "es%onsible to, the mic"o 'nanceinstitution -o" the con&uct o- business o- the mic"o 'nanceinstitution, as ell as the mic"o 'nance institution itsel-, shall be

&eeme& to be (uilt) o- the o:ence an& shall be liable to be%"ocee&e& a(ainst an& %unishe& acco"&in(l)4

P%!$ that nothin( containe& in this sub2section shall"en&e" an) such %e"son liable to %unishment i- he %"o$es that thecont"a$ention o" &e-ault as committe& ithout his knole&(e o"that he ha& ee"cise& all &ue &ili(ence to %"e$ent thecommission o- such o:ence.*+ Cotithstan&in( an)thin( containe& in sub2section *1+, he"ean o:ence un&e" this Act has been committe& b) a mic"o 'nanceinstitution an& it is %"o$e& that the same as committe& ith the

consent o" conni$ance o-, o" is att"ibutable to an) ne(lect on the%a"t o-, an) %e"son ho is o" as a &i"ecto", t"ustee, membe" o-the mana(in( committee, mana(e", sec"eta") o" othe" oce" o"em%lo)ee o- the mic"o 'nance institution hen the o:ence is o"as committe&, such %e"son shall also be &eeme& to be (uilt) o-the o:ence an& shall be liable to be %"ocee&e& a(ainst an&%unishe& acco"&in(l).E@#3&&'!< Fo" the %u"%oses o- this section, an) o:ence%unishable un&e" this Act shall be &eeme& to ha$e beencommitte& at the %lace he"e the "e(iste"e& oce o" %"inci%al

oce o- the mic"o 'nance institution, is situate&.oe"s o- !#DRA Bankto im%oseenalt).

1. *1+ Cotithstan&in( an)thin( to the cont"a") containe& insections :; an& :, the !#DRA Bank ma) im%ose %enalt),hich ma) eten& u% to '$e lakhs "u%ees he"e thecont"a$ention is o- the natu"e "e-e""e& to in sections :; an&:.

*+ F!% '$ #%#!*$ ! -#!*/ #$&3'+ $% '**$c'!, '$ MUDRA B&> *&33 *$%$ !'c$ ! '$ -c%!8&c$ *'''! %$%/ ' '! *!4 c&*$ 4+ '$&-!' *#$c8$ '$ !'c$ *!3 !' 6$ -#!*$ &* $&3'+ & & %$&*!&63$ !##!%''+ ! 6$/ $&% *&33

&3*! 6$ /$ '! *c -c%! 8&c$ *'''!.*3+ An) %enalt) im%ose& b) the !#DRA Bank un&e" sub2section

*1+ shall be %a)able ithin a %e"io& o- thi"t) &a)s -"om the &ateon hich the notice b) the !#DRA Bank &eman&in( %a)mento- the amount is se"$e& on the mic"o 'nance institution an&the o"&e"s o- the !#DRA Bank shall be en-o"ceable in the samemanne" as i- it e"e a &ec"ee ma&e b) the ci$il cou"t in a ci$ilsuit.

Ba" o- ci$ilu"is&iction.

2.Co ci$il cou"t shall ha$e u"is&iction a(ainst an) mic"o 'nanceinstitution in "es%ect o- an) cont"a$ention o" &e-ault -o" hich

an) %enalt) has been im%ose& b) the !#DRA Bank.

G


30/33


[Document title]

:. (1+ Co cou"t shall take co(ni9ance o- an) o:ence %unishableun&e" this Act o" an) "ules o" "e(ulations ma&e the"eun&e"$@c$#'#! &com%laint ma&e 4%'/ 6+ & !c$% !%!'$% #$%*! &'!%=$, 6+ /$$%&3 !% *#$c&3 !%$%, 6+

'$ MUDRA B&>

P%!$that no such oce" o" othe" %e"son shall becom%etent to 'le the com%laint unless he is (ene"all) o"s%eciall) autho"i9e& in "itin( b) the !#DRA Bank.

6o(ni9ance o-o:ences.

*+ Co cou"t in-e"io" to that o- !et"o%olitan !a(ist"ate o" aNu&icial !a(ist"ate o- the '"st class shall t") an) o:ence%unishable un&e" this Act.

o- 1GE.3+ Cotithstan&in( an)thin( to cont"a") containe& in the 6o&e o-6"iminal "oce&u"e, 1GE3, a cou"t, i- it consi&e"s 't to &o so, ma)&is%ense ith the atten&ance o- the oce" o- the Rese"$e Bank

o" othe" %e"son 'lin( the com%laint on its behal-, but the cou"t inits &isc"etion at an) sta(e o- the %"ocee&in(, ma) &i"ect %e"sonalatten&ance o- such oce" o" the %e"son..The cou"t im%osin( an) 'ne un&e" this Act ma) &i"ect thatthe hole o" an) %a"t the"eo- shall be a%%lie& -o", o" toa"&s%a)ment o-, the cost o- the %"ocee&in(.

A%%licationo- 'ne.

CHAPTER IMISCELLANEOUS

Di"ections 5. Jhile ee"cisin( %oe"s un&e" ection 1E,3,8 an& G in"es%ect o- mic"o 'nance institutions hich a"e com%anies"e(iste"e& un&e" the 6om%anies Act, 013, othe" thancom%anies ith the cha"itable obects "e(iste"e& un&e" ection 8o- the 6om%anies Act, 013, the !#DRA Bank shall consult theRese"$e Bank an& ensu"e that "e(ulato") -"ameo"k is a%%licableto such com%anies is in con-o"mit) ith co""es%on&in("e(ulations , &i"ections an& (ui&elines issue& b) RBI tocom%anies "e(iste"e& as non2bankin( 'nance com%anies.

oe" o-6ent"al

7o$e"nmentto call -o"in-o"mation,etc.


31/33


[Document title]

;. *1+ T$ C$'%&3 G!$%-$' -&+, '$ #63c'$%$*', 6+ !'8c&'!, %$c' '&' &+ !% &33 ! '$#%!*!* ! '* Ac',"

(&)*&33 !' #3+ '! *c c3&** !% c3&**$* ! -c%!8&c$ *'''!*7

(b) *&33 #3+ '! &+ c3&** !% c3&**$* ! -c%! 8&c$*'''!* 4' *c $@c$#'!*, -!8c&'!* &&'&'!*, &* -&+ 6$ *#$c8$ '$ !'8c&'!.

oe" toeem%tclass o"classes o-

mic"o'nance-"om%"o$isionso- this Act.

*+ A co%) o- e$e") noti'cation issue& un&e" sub2section *1+,shall be lai& be-o"e each ouse o- a"liament, hile it is insession, -o" a total %e"io& o- thi"t) &a)s hich ma) be com%"ise&in one session o" in to o" mo"e successi$e sessions, an& i-,be-o"e the e%i") o- the session imme&iatel) -olloin( the

session o" the successi$e sessions a-o"esai&, both ouses a("eein &isa%%"o$in( the issue o- the noti'cation o" both ouses a("eein makin( an) mo&i'cation in the noti'cation, the noti'cationshall not be issue& o", as the case ma) be, shall be issue& onl) insuch mo&i'e& -o"m as ma) be a("ee& u%on b) both the ouses..The %"o$isions o- this Act shall ha$e e:ect, notithstan&in(an)thin( inconsistent the"eith containe& in an) othe" la -o"the time bein( in -o"ce o" an) inst"ument ha$in( e:ect b) $i"tueo- an) such la.

Act to ha$eo$e"2"i&in(e:ect.

50. Co suit o" othe" le(al %"ocee&in(s shall lie a(ainst the

!#DRA Bank, o" an) &i"ecto", o" an) oce", o" othe" em%lo)eeo- the !#DRA Bank, o" &+ !'$% #$%*! !% &/$c+autho"i9e& b) the !#DRA Bank, to &ischa"(e an) -unctions un&e"this Act -o" an) loss o" &ama(e cause& o" likel) to be cause& b)an)thin( hich is in (oo& -aith &one o" inten&e& to be &one in%u"suance o- this Act o" o- an) othe" la o" %"o$ision ha$in( the-o"ce o- la.51. *1+The 6ent"al 7o$e"nment ma), b) noti'cation in theOcial 7a9ette, make "ules -o" ca"")in( out the %"o$isions o- thisAct.

oe" tomake"ules.

*+ In %a"ticula", an& ithout %"eu&ice to the (ene"alit) o- the

-o"e(oin( %oe", such "ules ma) %"o$i&e -o" all o" an) o- the-olloin( matte"s, namel)4

*a+ the -o"m an& manne" o- %"o$i&in( mic"o 'nance se"$icesun&e" clause *(+ o- section ?

*b+ the -o"m an& manne" o- -u"nishin( o- "etu"ns, statementsan& othe" %a"ticula"s un&e" section E?

*c+ an) othe" matte" hich is to be, o" ma) be, %"esc"ibe&.52. *1+ The !#DRA Bank, ith the %"e$ious a%%"o$al o- the6ent"al 7o$e"nment ma), b) noti'cation in the Ocial 7a9ette,make "e(ulations not inconsistent ith this Act an& the "ules

ma&e the"eun&e" to ca"") out the %u"%oses o- this Act.

oe" tomake"e(ulations

31


32/33


[Document title]

*+ In %a"ticula", an& ithout %"eu&ice to the (ene"alit) o- the-o"e(oin( %oe", such "e(ulations ma) %"o$i&e -o" all o" an) o-the -olloin( matte"s, namel)42*a+ the othe" te"ms an& con&itions o- "emittance o- -un&s un&e"

sub2clause *iii+ o- clause *h+ o- section ?*b+ the -o"m an& manne" in hich a mic"o 'nance institution shallmake an a%%lication -o" "e(ist"ation an& the -ee %a)able to the!#DRA Bank un&e" sub2section *1+ o- section 1G?

*c+ amounts o- net one& -un&s un&e" clause *c+ o- sub2section*1+ o- section 0?

*&+ an) othe" con&ition -o" ("ant o- a ce"ti'cate o- "e(ist"ationun&e" clause *&+ o- sub2section *1+ o- section 0?

*e+ the -o"m in hich the balance sheet, %"o't an& loss account

o" an income an& e%en&itu"e account shall be %"e%a"e& un&e"section 3?*-+ ;uali'cations an& e%e"ience o- a %e"son &ul) ;uali'e& un&e"section ?*(+ the -o"m an& the manne" o- 'lin( "etu"n un&e" section 5?*h+ the %"oce&u"e -o" "emo$al o- an) oce", oce bea"e" o"mana(in( committee o- the mic"o 'nance institution o" -o"%"ohibitin( the mic"o 'nance institution -"om %"o$i&in( mic"o'nance se"$ices -o" such %e"io& as the !#DRA Bank ma) &eem't un&e" sub2section *+ o- section 30?*i+ the manne" o- mana(ement o- Fun& b) the Rese"$e Bank

un&e" sub2section *+ o- section 35?

*+ %"o$i&in( loans, "e'nance, ("ants, see& ca%ital o" an) othe"'nancial assistance to an) mic"o 'nance institution o" an) othe"a(enc) un&e" clause *a+ o- sub2section *3+ o- section 35?*k+ the te"ms an& con&itions subect to hich ("ants o" loansshall be (i$en b) the Rese"$e Bank un&e" clause *b+ o- sub2section *3+ o- section 35?*l+ the te"ms an& con&itions subect to hich the in$estment ine;uit) o" an) othe" -o"m o- ca%ital o" ;uasi2e;uit) o- a mic"o'nance institution shall be ma&e un&e" clause *c+ o- sub2section

*3+ o- section 35?*m+ an) othe" e%enses as ma) be "e;ui"e& -o" the %"omotion o-mic"o 'nance se"$ices un&e" clause *e+ o- sub2section *3+ o-section 35?*n+ the othe" e%enses *ece%t sala"ies, alloances an& othe""emune"ation o- oce"s an& othe" em%lo)ees+ o- the Rese"$eBank un&e" clause *-+ o- sub2section *3+ o- section 35?

*3+ an) othe" matte" hich is "e;ui"e& to be, o" ma) be,s%eci'e& b)

"e(ulations.

3


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[Document title]

Rules,"e(ulationsan& o"&e"s tobe lai& be-o"e

a"liament.

5:. $e") "ule o" o"&e" ma&e b) the 6ent"al 7o$e"nment an&e$e") "e(ulation ma&e b) the Rese"$e Bank shall be lai&, as soonas ma) be a-te" it is ma&e, be-o"e each ouse o- a"liament,hile it is in session, -o" a total %e"io& o- thi"t) &a)s hich ma)

be com%"ise& in one session o" in to o" mo"e successi$esessions, an& i-, be-o"e the e%i") o- the session imme&iatel)-olloin( the session o" the successi$e sessions a-o"esai&, bothouses a("ee in makin( an) mo&i'cation in the "ule, "e(ulationo" o"&e" o" both ouses a("ee that the "ule, "e(ulation o" o"&e"shoul& not be ma&e, the "ule, "e(ulation o" o"&e" shall the"ea-te"ha$e e:ect onl) in such mo&i'e& -o"m o" be o- no e:ect, as thecase ma) be? so, hoe$e", that an) such mo&i'cation o"annulment shall be ithout %"eu&ice to the $ali&it) o- an)thin(%"e$iousl) &one un&e" that "ule, "e(ulation o" o"&e".

oe" to

"emo$e&iculties.

5. *1+ I- an) &icult) a"ises in (i$in( e:ect to the %"o$isions o-

this Act, the 6ent"al 7o$e"nment ma), b) o"&e" %ublishe& in theOcial 7a9ette, make such %"o$isions not inconsistent ith the%"o$isions o- this Act, as a%%ea" to it to be necessa") o"e%e&ient, -o" "emo$in( the &icult)4

P%!$that no such o"&e" shall be ma&e a-te" the e%i")o- a %e"io& o- to )ea"s -"om the &ate o- commencement o- thisAct.*+ $e") o"&e" ma&e un&e" this section shall, as soon as ma) bea-te" it is ma&e, be lai& be-o"e each ouse o- a"liament.

150622_Draft MFI Bill Track Mode 18032015 Amended

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Transcript of 150622_Draft MFI Bill Track Mode 18032015 Amended