Finance Minister P Chidambaram on Thursday ruled out changes in tax laws for micro-finance institutions and allowing foreign equity in the sector, but kept options open for a separate fund for them.
"Changes in tax laws are completely unnecessary as it would only lead to bureaucratic and legislative red tape," he said adding access to foreign equity was also not required as there was no dearth of funds in the country.
To a demand for setting up a separate regulator for MFIs, he said one should move cautiously as Indian society was already "over-regulated".
Though he did not rule out the possibility of having a regulator for MFIs, Chidambaram said it should be only for deposit taking institutions.
Speaking at a conference of MFIs, he said a separate fund for them was not required as they can access banks, which were flushed with money. But if necessary, a fund could be set up, he added.
Referring to recent data, he said banks are required to maintain 25 per cent of deposits as Statutory Liquidity Ratio but they actually maintain 40 per cent, indicating that there were enough resources available for lending.
Stressing on government support for self-help groups and MFIs, he said all efforts should be made to make more credit available to these institutions.
He asked MFIs to act as intermediaries between banks and self-help groups.