According to the Reserve Bank of India (RBI) Statement on Developmental and Regulatory Policies, the central bank raised the household income limit for borrowers of NBFC-MFIS. This Statement sets out various developmental and regulatory policy measures for strengthening regulation and supervision; broadening and deepening financial markets; and improving the payment and settlement systems.
In the wake of the Andhra Pradesh micro finance crisis in 2010, a Sub-Committee of the Central Board of the Reserve Bank was constituted to study issues and concerns in the MFI sector. Based on the recommendations of the Committee, it was decided to create a separate category of NBFC, viz., Non-Banking Financial Company-Micro Finance Institution (NBFC-MFI) and a detailed regulatory framework for NBFC-MFIs was put in place in December 2011. The income and loan limits to classify an exposure as eligible asset were last revised in 2015.
Taking into consideration the important role played by MFIs in delivering credit to those in the bottom of the economic pyramid and enable them to play their assigned role in a growing economy, it is proposed to increase the household income limit for borrowers of NBFC-MFIs from the current level of Rs 1.00 lakh for rural areas and Rs 1.60 lakh for urban/semi urban areas to Rs 1.25 lakh and Rs 2.00 lakh, respectively. The has also been decided to raise the lending limit from Rs 1.00 lakh to Rs 1.25 lakh per eligible borrower.
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