The proposals include alignment of pricing guidelines for NBFC-MFIs with guidelines for NBFCs and Introduction of a standard simplified fact sheet on pricing of microfinance loans for better transparency.
The Reserve Bank of India (RBI) on June 14 released a consultative document on uniform regulation for companies engaged in microfinance business. The document aims at harmonising the regulatory frameworks for various regulated lenders in the microfinance space, the RBI said.
The key proposals include a common definition of microfinance loans for all regulated entities, capping the outflow on account of repayment of loan obligations of a household to a percentage of the household income, a Board approved policy for household income assessment and no pre-payment penalty or requirement of collateral along with greater flexibility of repayment frequency for all microfinance loans
Also, the proposals include alignment of pricing guidelines for NBFC-MFIs with guidelines for NBFCs, introduction of a standard simplified fact sheet on pricing of microfinance loans for better transparency, and display of minimum and maximum and average interest rates charged on microfinance loans on the websites of regulated entities, the RBI said.
The RBI has sought comments on the consultative paper by July 31, 2021.
In the Statement on Developmental and Regulatory Policies dated February 5, 2021 released with the fifth Bi-monthly Monetary Policy Statement for 2020-21, the Reserve Bank of India had announced that a consultative document will be issued for harmonising the regulatory frameworks for various regulated lenders in the microfinance space.
Accordingly, the consultative document has been released today for feedback from all stakeholders.RBI releases consultative document on microfinance regulation; no pre-payment penalty proposed - Moneycontrol
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