look news india
New Delhi: Commercial banks are currently cautious in lending to small microfinance institutions (MFIs). Due to this, MFIs have to borrow from non-banking financial institutions at higher interest rates.
Recently, RBI deputy governor M Rajeswara Rao slammed micro lenders for “irregularly” increasing their margins and said that in the new system where there are no margin limits, such lenders immediately pass on the increased costs to borrowers.
Sources in Microfinance Industry Network, an industry body and self-regulatory body, said smaller MFIs with a loan book of less than Rs 1,000 crore or Rs 500 crore have been facing difficulty in getting loans from banks for some time now.
During Corona, the government provided guarantees under CGSMFI on loans given by banks to MFIs, which increased the flow of loan funds. But then the banks started checking and the flow of loans to small MFIs was affected.
According to RBI data, the total assets of NBFC-MFIs stood at Rs 1.36 lakh crore as on September 30, 2023. The regulator said NBFC-MFIs are an important segment in the NBFC sector and their share in total assets has increased in recent years.
