RBI creates new category NBFCs for micro finance
03 Dec 2011
The Reserve Bank of India (RBI) today announced the creation of a separate category of non-banking financial companies for micro finance institutions, namely, NBFC-MFI, which will be directly under its control, thereby removing the ambiguity over regulation of MFIs.
RBI has capped the maximum rate of interest that an NBFC-MFI can recover from a borrower at 26 per cent.
The decision is in line with the recommendations of the Malegam Committee, which was set up following the micro finance fiasco in Andhra Pradesh.
Under the guidelines issued on Friday, an NBFC-MFI should have minimum net owned funds of Rs5 crore. This will, however, be lower at Rs2 crore for NBFC-MFIs registered in the North East region of the country.
`Net Assets' are defined as total assets other than cash and bank balances and money market instruments while `Qualifying Asset' will mean loan disbursed by an NBFC-MFI to a borrower with a rural household annual income not exceeding Rs60,000 or urban and semi-urban household income not exceeding Rs1,20,000.
The loan amount should not exceed Rs35,000 in the first cycle and Rs50,000 in subsequent cycles and the total indebtedness of the borrower should not exceed Rs50,000 at any period of time.
.jpg "RBI keeps repo rate unchanged as focus remains on inflation")
.jpg "Indian Oil, Panasonic team up for lithium-ion cell production in India")
