The Reserve Bank of India (RBI) has increased the household income and lending limit for microfinance borrowers in order to boost credit flow to the bottom of the economic pyramid.
The household income limit for borrowers of Non-banking finance company-Microfinance Institutions (NBFC-MFIs) has been increased to Rs 1.25 lakh for rural areas and Rs 2 lakh for urban and semi-urban areas. Earlier, the limits were set at Rs 1 lakh and Rs 1.6 lakh respectively.
Also, the lending limit has been increased to Rs 1.25 lakh from Rs 1 lakh per eligible borrower, the RBI said.
A separate category for NBFC-MFIs was created with a regulatory framework in 2011, based on the recommendations of YH Malegam committee. The income and loan limits on loans given by NBFC-MFIs were last revised in 2015.
RBI said that detailed guidelines would be issued shortly. Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.