MFIs to form credit bureaus

Microfinance institutions (MFIs) have come together to form credit bureaus for exchange of information relating to borrowers and their repayment habits.

"For the healthy development of the sector, it is needed to promote responsible lending by the MFIs for which credit bureaus will be formed," the Microfinance Institutions Network (MFIN) said in a statement.

MFIN, a body which represents 44 MFIs registered with the RBI, said that the credit bureaus would be in a position to capture data of all MFI customers and would also help in avoiding multiple lending and over leveraging.

The bureaus would have customer data, including repayment behaviour that would allow lenders to take more informed credit decisions.

MFIN have also laid a code of conduct which calls for limiting borrowers' group loan sizes to less than Rs 50,000 as well as a whistle blower policy, it said in the statement.

MFIs have recently been under fire from various concerned government departments for charging high interest rates.