Microfinance SRO makes pitch for 4% cap on RoA after RBI action on 4 NBFCs

The Self-Regulatory Organization (SRO) for micro-lenders has proposed capping the return on assets (RoA) at 4%, to promote sustainable growth in the sector. This follows concerns over high RoAs leading to unsustainable lending practices. By limiting RoA, the SRO aims to balance profitability with responsible lending, ensuring micro-lenders prioritize the welfare of borrowers. The SRO’s move comes amid increasing scrutiny of microfinance practices and efforts to protect borrowers from excessive debt.