Login With Google
Microfinance Institutions
Why is it in the news?
- Reserve Bank of India has decided to raise the household income limit of borrowers to Rs. 2 lakh for urban and semi urban areas from ₹1.6 lakh.
- The move will enable more borrowers to avail loans from microfinance institutions (MFI).
More in the news
- For rural areas, the limit has been increased from ₹1 lakh to ₹1.25 lakh.
- Loans by MFIs to such borrowers are uncollateralised.
- The lending limit per borrower has also been hiked from ₹1 lakh to ₹1.25 lakh.
- The decision was taken after taking into consideration the important role played by MFIs in delivering credit to those at the bottom of the economic pyramid and enable them to play their assigned role in a growing economy
About Microfinance Institutions:
- These are financial institutions that provide loans and other financial services to poor sections of the society.
- Usually, they operate in rural areas and among low income urban people by extending small loans.
- The RBI has extended its regulation and supervision to some of the MFIs that qualify certain criteria.
- Objective of the RBI is to make such MFIs healthy and stable.
- Such RBI regulated MFIs who takes a registration with RBI and fulfill the accompanied conditions are called NBFC-MFIs or Non-Banking Financial Company-Microfinance Institutions.
Source
The Hindu.