In order to facilitate easy credit access to the poor, the finance minister P Chidambaram on Tuesday announced government’s plan to set up two funds of Rs 500 crore each. “Based on the interim report (of the Financial Inclusion Committee), we have decided to set up two funds — Financial Inclusion Fund and Financial Inclusion Technology Fund —- of Rs 500 crore each,” Chidambaram said at a conference on microfinance.

He also ascertained that the Government will implement the recommendations of the committee chaired by C Rangarajan, chairman of the Economic Advisory Council to the Prime Minister, when it submits the final report. The Centre has already set up a Rs 100-crore microfinance development fund.

The finance minister maintained that there is no clarity on the Government’s role in the microfinance sector. “It is not yet clear what the Government should do, what the government shouldn’t do, what the Government should regulate and what it shouldn’t regulate,” he pointed out.

The Government has introduced a Micro Finance Bill in Parliament to regulate non-profit microfinance institutions. Chidambaram added that although the goal of all microfinance institutions is the same — to provide credit to the poor - organisations operate on different principles. Organisations which operate for profits want interest rates to be higher so as to recover costs, he specified.