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The RBI has doubled the total loan amount that a person can borrow from a microfinance institution. For eligible rural and semi-urban households, total indebtedness of the borrower, excluding educational and medical expenses, has been revised to ₹1 lakh from the current limit of ₹50,000.
The committee on ‘Comprehensive Financial Services for Small Businesses and Low Income Households’, chaired by Nachiket Mor, has also recommended revision of household income limits to whom loans are disbursed. For a rural household, the annual income has been enhanced to ₹1 lakh (from ₹60,000) and for urban and semi-urban households to ₹1.6 lakh (from ₹1.2 lakh). The committee also recommended that disbursement of the loan amount should not exceed ₹60,000 (enhanced from ₹35,000) in the first cycle and ₹1 lakh (enhanced from ₹50,000) in subsequent cycles.
Priority sector norms The RBI had constituted an internal working group to revisit the priority sector guidelines. The group’s report has recommended specific sub-targets for small and marginal farmers and micro enterprises and inclusion of certain specific types of social infrastructure within the ambit of priority sector lending. The working group has also recommended introduction of tradable priority sector lending certificates as another instrument to manage deficit/surplus amongst the players within the system. The central bank will take a view on the recommendations in the light of the feedback received.
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