When the demands gained momentum by 2005, the then Governor, Dr YV Reddy stated in August 2005, “Microfinance movement across the country involving common people has benefited immensely by its informality and flexibility. Hence, their organisation, structure and methods of working should be simple and any regulation will be inconsistent with the core-spirit of the movement”.
Thus we were extending every possible support for a financial innovation which was assessed by us as very important for furthering financial inclusion in the country. We were very convinced that light touch regulation was sufficient in those formative years. However, as the sector grew, certain inadequacies and failures became apparent.