In 2022, the RBI updated regulations for MFIs, which now apply to all entities in the sector, including banks, small finance banks, and non-banking financial companies (NBFCs)
Industry-wide stress in the microfinance sector has built up due to unchecked credit growth and multiple loan disbursements to the same customers, resulting in overleveraging among borrowers
Private life insurers dominate the segment, accounting for over Rs 10,708.4 crore, while the state-owned Life Insurance Corporation of India (LIC) contributed nearly Rs 152 crore
The apex bank has asked lenders to strengthen their underwriting standards and collection efforts to limit the conversion of stress into Non-Performing Assets (NPAs)
Of the Rs 270 crore worth of loans, around Rs 208 crore are non-performing loans, and the remaining Rs 62.36 crore worth of loans have been written off by the bank
Earlier this month, the RBI barred four NBFCs, including two MFIs, from sanctioning and disbursing loans due to charging exorbitant interest rates to borrowers
The asset quality of the microfinance portfolio deteriorated in Q1 FY25 as the heatwave across the country adversely impacted the income of borrowers and collections
Sa-dhan has also suggested a special fund for the northeastern states in view of the unrest in Manipur, which has hit micro lenders that extended loans in the state
R Baskar Babu, managing director & chief executive officer of Suryoday Small Finance Bank, tells Manojit Saha in an interview that the regulator wants these lenders to rebalance the portfolio
