Banks' pricing of micro-finance loans may soon be linked to MCLR

85% qualifying asset rule for MFIs may be tweaked to assist diversification

Banks’ pricing of micro-finance loans may soon be linked to their marginal cost of funds-based lending rate (MCLR) and caps imposed on per customer exposure to arrest levels of indebtedness.
 
Microfinance institutions (MFIs) may also be allowed a leeway with a mark-up over the 10 per cent of their cost of borrowings when pricing loans. This takes into account the fact that they are not able to absorb the additional credit costs arising out of the pandemic for two consecutive financial years. The limited headroom within the margin of the existing 10 per cent over the cost of funds