RBI Releases Consultative Document on Regulation of Microfinance

On 14th June, 2021, Reserve Bank of India released a Consultative Document on Regulation of Microfinance sector.

Aim

  • To address the concerns related to the over-indebtedness of microfinance borrowers and empowering them.
  • Harmonising the regulatory frameworks for various regulated lenders in the microfinance space.

Need

  • Ineffective Rules and Regulations: At present, Microfinance Institutions are governed by NBFC-Micro Finance Institutions (Reserve Bank) Directions, 2011. So the new document is much needed to govern the growth and misuse of Microfinance Sectors.
  • Increased Share of Banks and Small Finance Banks: After 2015 the banks and small finance banks started increasing their operations in Microfinance Sector. ....
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