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A Sub-Committee of the Central Board of the Reserve Bank (Chairman: Shri Y. H. Malegam) was constituted to study issues and concerns in the MFI sector. Following on the recommendations, RBI has introduced Micro Finance Institutions(MFIs) as a new category of Non Banking Financial Companies (NBFC). The RBI said that NBFC-MFI will have the following features -Will be a non Deposit taking NBFC. -Have minimum net owned funds of Rs 5 crores -Not less than 85% of its net assets being under qualifying assets. The regulation of MFI by RBI is considered a major move to regulate a very sensitive financing sector. It principally aims at ensuring consumer protection. As per the regulation, MFI need to have atleast 85% of its assets (excluding cash and the like) in Good Assets or"Qualifying Assets. The criteria of these assets are: 1. Borrower’s annual income : Rural area - Less than Rs 60,000 /Urban less than Rs 1,20,000 2. Total Loan : Max Rs. 50,000 3. Tenure : Minimum 2 years for loans over Rs 15,000 4. No prepayment penalty 5. Lending without collateral; 6. Repayment of instalments (weekly, fortnightly or monthly instalments) at the choice of the borrower At Riskpro, we believe that the move is a significant step towards consumer protection and the guidelines for qualifying assets brings the right loans under the scanner. Riskpro also has detailed reports and studies of MFI industries and the risks assocaited in the industry. Please reach out to manoj.jain@riskpro.in for more information.