Abake Assongba Applauds Efforts to Keep Micro-Loan Interest Rates Low

NEW YORK, NY, June 22, 2012

According to a Wall Street Journal article, Indian government officials have introduced a bill into Parliament that will hand over power to the country's central bank to manage the microfinance sector. This sector is generally charged with lending money to small borrowers. Finance Minister Pranab Mukherjee introduced the Microfinance Institutions (Development and Regulations) Bill to Parliament so the Reserve Bank of India will set a maximum interest rate that can be charged by micro lenders. Abake Assongba, the founder of the nonprofit organization, Abake's Foundation, supports this move, noting that it will help people, particularly with lower incomes, achieve financial independence.

In addition, the Reserve Bank of India will place performance standards on institutions to ensure that they use "fair and reasonable methods" for recover of loans. Micro lenders tend to borrow money primarily from banks. In turn, they offer small-ticket loans of around $200 to help individuals start or expand their small business. Abake Assongba believes that if passed, this law would put some inspiration back into the business community, particularly for individuals already experiencing a huge financial burden.

"We are finding that these practices are quite beneficial for the uplifting of a lower income person to achieve financial independence," Abake Assongba said. "These loan programs seem to be universally applicable throughout the world."

At one time, microfinance was considered an ideal tool to serve the financial needs of the poor. However, India's micro lenders have received harsh criticism for implementing outrageous interest rates and using unfair methods to recover debts. These acts prompted governmental officials in states, like Andhra Pradesh, to create tough policies to govern the sector.

The sector is also facing a fund shortage since micro lenders' are wary to lend out money. However, if the new law is approved, it would bring uniformity in rules tailored by individual states and put greater measures into place for micro lenders. Also, if approved, the bill would allow the central bank to have powers to bar micro lenders from operating if they do not pay debts or break the rules.

Abake Assongba plans to follow the implementation of the bill. She hopes that other countries will follow suit to help small business owners and other individuals struggling with high interest rate micro-loans by bringing forth a similar bill to their representative lawmakers.

ABOUT:

Abake's Foundation, founded by Abake Assongba, is a non-profit organization that helps women and children in New York and West Africa. Abake Assongba has developed several programs and initiatives to improve children's education and economic opportunities of their parents. These programs encompass a long list of charitable donations and economic efforts, including school supply donations, scholarships, food distribution, and micro-loans. Abake Assongba and her husband, Anthony JW De Rosa, along with others, have positively impacted multiple lives through their efforts. They look forward to improving communities around the world.

Website: http://www.abakesfoundation.org