Microfinance Industry Tightens Regulations Following RBI Rebuke

Microfinance Institutions Network (MFIN) has announced that its members are cutting interest rates and adopting new measures to protect borrowers. This comes after criticism from Reserve Bank Governor Shaktikanta Das regarding high-interest rates. MFIN emphasizes responsible lending and has set new guidelines for member practices.

The Microfinance Institutions Network (MFIN) has commenced a reduction in loan interest rates while implementing protective measures for borrowers. This initiative follows critiques by Reserve Bank Governor Shaktikanta Das, who denounced 'usurious' interest charges.

MFIN, the first Self-Regulatory Organisation (SRO) in India, has affirmed that these steps reflect a proactive approach within the industry. They aim to balance operational efficiency with client benefits. According to an MFIN statement, ten members have reduced rates by approximately 1.50% over the past few months.

The improvements are attributed to better portfolio credit quality post-COVID, enhanced process efficiency, technological adoption, and diversified funding sources. MFIN's annual meeting also emphasized responsible lending, customer protection, and sustainable sector growth. Lenders agreed on limiting microfinance lenders per borrower and total borrower indebtedness, while MFIN's Chief Executive Alok Misra confirmed ongoing sector oversight.