Micro finance institutions need to keep a level consistent with repaying capacity of the borrower, Prime Minister's Economic Advisory Council Chairman C Rangarajan said today.
"It is necessary to ensure that burden on the borrower is not such as to make him default. It is necessary for micro finance institutions to keep the overall cost to borrowers maintained at a level that is consistent with their repaying capacity", Rangarajan said while addressing a conference on 'Financial Inclusion', organised by business school Great Lakes Institute Of Management at Manamai, about 45 kms from here.
It was necessary for micro finance institutions to separate the 'pure interest' costs from other costs charged from borrowers, he said.
