The Reserve Bank of India (RBI)’s revised framework for microfinance loans will engender ‘greater harmonisation’ in the business landscape of different types of lenders, enhance operational flexibility of NBFC-MFIs and support their profitability, rating agency Crisil said on Monday. Managing director of Kolkata-based NBFC-MFI Arohan Financial Services Manoj Nambiar told FE that the regulatory framework for microfinance loans, announced by the RBI, is “a hugely positive, radical and a paradigm shift” for the microfinance industry. Credit guideline harmonisation will ensure credit quality improvement and lower credit costs for microfinance lenders.Deregulation on pricing will allow NBFC-MFIs to price loans for risk based on borrower repayment track record. “For NBFC-MFIs, deregulation on pricing will allow them to price for risks. A good customer can get a better rate and a new to credit customer might get a slightly higher rate. It can help NBFC-MFIs to fix prices so that they can be viable and sustainable in the long run and can extract capital,” Nambiar said.

NBFC-MFI Arohan Financial Services told that the regulatory framework for microfinance loans, announced by the RBI, is a hugely positive.