No More Pricing Caps On Micro-Finance Loans, Says RBI: Report
NDTV
The RBI has removed pricing caps on microfinance loans given by financial institutions, the central bank said in a circular issued on Monday.
The Reserve Bank of India has removed pricing curbs on microfinance loans given by financial institutions, the central bank said in a circular issued on Monday setting out fresh guidelines for microfinancing.
Previously, there were limits set on the maximum interest rate that a microfinance lender could charge on loans which was set at a maximum of 10-12 percentage points above the institutions' cost of funds or 2.75 times the average base rate for top five commercial banks.
Any loan given without a collateral to a household having an annual income of up to 300,000 Indian rupees ($3,918) is considered to be a microfinance loan.
The RBI had put out a discussion paper on microfinance loans in June 2021 and released final guidelines after taking into account comments received from stakeholders.
