MFI consultation paper: Incrementally positive for NBFC-MFIs, says report

The Reserve Bank of India’s (RBI’s) consultative paper on regulation of microfinance may swing the competitive advantage in favour of micro-finance institutions (MFIs) vis-a-vis banks. The paper has proposed greater harmoni­sation in the overall regulatory landscape. It includes threshold definitions anchored to household income, removal of caps on number of total lenders and pricing, and elimination of any end-use restrictions on qualifying borrowers.

According to HDFC Securities’ BFSI Sector Update report, given that most of the existing restrictions were applicable to NBFC-MFIs (which had a 30 per cent market share in MFI loans by value and 35