Business Standard

Reserve Bank of India likely to tweak norms to reduce MFI risk

RBI may tweak the qualifying assets threshold for microfinance institutions (MFIs) to 75 per cent of their net assets, compared with the current level of 85 per cent of net assets

RBI, Reserve Bank of India
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Raghu Mohan Mumbai
The Reserve Bank of India (RBI) may tweak the qualifying assets threshold for microfinance institutions (MFIs) to 75 per cent of their net assets, compared with the current level of 85 per cent of net assets.

The parameters for MFIs’ qualifying assets are exposure to households with annual income limits of Rs 1.25 lakh (rural) and Rs 2 lakh (urban), are collateral-free loans with no prepayment penalty, and flexibility of repayment periodicity. The loan amount limit is Rs 1.25 lakh (Rs 75,000 in the first cycle and exclusion of loans for meeting education and medical expenses from the loan limit), and

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