Reserve Bank raises income & lending limit for Micro Finance Institutions (MFIs)

On November 8, 2019, India’s central banking institution, the Reserve Bank of India (RBI) has raised the household income eligibility limit for eligible borrowers from NBFC –MFIs (Non-Banking Financial Companies-  Micro finance Institutions) to Rs 1.25 lakh from the existing Rs 1 lakh in rural areas and from Rs 1.6 lakh to Rs 2 lakh in urban /semi-urban areas.
Apart from this, RBI also increased the limit on disbursal of loans to Rs 75,000 from Rs 60,000 for the 1st cycle, and from Rs 1 lakh for the successive cycles to Rs 1.25 lakh.
RBIKey Points:
i.
MFIs are making a significant contribution to increase financial inclusion by delivering credit to those people in the bottom of the economic pyramid and help them play their assigned role in a growing economy.

ii.Background: The Reserve Bank had formed a sub-committee under the chairmanship of YH Malegam in 2010 to study the issues and challenges of the microfinance sector. A separate category of NBFC-MFIs was constituted on the basis of the suggestions of the sub-committee and detailed regulatory guidelines were issued in December 2011.

About RBI:
Headquarters
– Maharashtra
Established- 1 April 1935
Governor- Shaktikanta Das
Deputy Governors- 4 (BP Kanungo, N S Vishwanathan, and Mahesh Kumar Jain, 1 is yet to be appointed)

NBFC-MFI:
It is  a non-deposit taking NBFC (other than a company licensed under Section 25 of the Indian Companies Act, 1956) that fulfils minimum net owned Funds of Rs.5 crore.





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