RBI Revises Qualifying Asset Criteria for NBFC-MFIs to Ensure 60% Microfinance Loan Composition

The Reserve Bank of India (RBI) has revised the qualifying asset criteria for Non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs). Under the new guidelines, NBFC-MFIs must now ensure that at least 60% of their total assets are composed of microfinance loans. This is a reduction from the previous requirement of 75%. This change is intended to provide greater operational flexibility to NBFC-MFIs, allowing them to diversify their portfolios and better manage risks. By lowering the threshold, the RBI aims to strengthen the MFI sector and enhance its ability to serve the financial needs of low-income households. The revised criteria are part of the RBI's ongoing efforts to create a more robust and resilient regulatory framework for microfinance institutions, ensuring their continued role in promoting financial inclusion while maintaining financial stability. This move is expected to have a positive impact on the growth and sustainability of the microfinance sector in India.