MFIN proposes common code of conduct for banks and NBFCs in microlending

With multiple lenders chasing same set of borrowers in rural areas, signs of over-borrowing are now apparent in microfinance

Given the aggressive lending by banks and financial institutions in the microfinance space, MFIN (microfinance institution network), the representative body of MFIs, is planning to bring on board banks, NBFCs (non-banking finance companies) and SFBs (small finance banks) to enter an agreeable code of conduct, limiting the indebtedness of borrowers.

With multiple financial institutions chasing same set of borrowers in rural areas, signs of over-borrowing are now apparent in the microfinance sector. In fact, close to 20-30 per cent of applications received by micro lending institutions are now getting rejected on account of existing excess borrowing, according to some microfinance players.

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