Microfinance sector needs regulation: Sisodia

New Delhi, Nov 5: There is a need to regulate the unorganised sector of microfinancing in the country and an ''imaginative framework'' is required to manage 800-odd microfinace institutions, said Mr N S Sisodia, Chairman, Group of Advisors, Microfinance India.

Mr Sisodia, former Secretary, Banking Division in the Ministry of Finance, urged the government to set up a regulatory body to look after the operations of 800 odd microfinance institutions.

''Numbers are large and to manage them in an imaginative framework there is a need to mobilise savings and to provide a right structure to help the sector grow,'' he said.

Mr Sisodia also suggested allowing the institutions to operate on commercial basis and to remove any ceiling on the rate of interest that can be charged by them.

''Ceilings on the rate of interest discourages commercial money lenders from lending money that leaves to people at the mercy of traditional money lenders. It needs to be more flexible,'' he said.

UNI