RBI’s Proposed Regulatory Changes To Create Level Playing Field; Provide More Flexibility To NBFC-MFIs: ICRA

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ICRA Research Report

Lenders in the microfinance finance industry in India comprise not only non-banking financial company - microfinance institutions, but also NBFC - investment and credit companies (NBFC-ICC), scheduled commercial banks, small finance banks and others.

However, the Reserve Bank of India’s regulations for microfinance lending activities are applicable only to NBFC-MFIs while the other lenders are governed by the different regulatory frameworks applicable to them.

As the composition of the industry is tilted towards scheduled commercial banks and small finance banks, which have a majority share (~60%) of microfinance (excluding the self-help groups bank linkage programme) in the country while NBFC-MFIs have a share of ~30%, there is a need for a harmonised regulatory framework.

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