NBFC-MFIs to gain from RBI’s revised norms: Crisil

29 March 2022

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.