Money & Banking

RBI raises lending capacities of MFIs

Our Bureau Mumbai | Updated on October 04, 2019 Published on October 04, 2019

Reserve Bank of India Governor Shaktikanta Das   -  Paul Noronha

RBI also announces measures to develop offshore rupee market

Expanding the lending capacities of Micro Finance Institutions (MFIs), the Reserve Bank of India on Friday raised the household income limit for borrowers of NBFC-MFIS.

The household income limit for borrowers of NBFC-MFIs in rural areas will be hiked to ₹1.25 lakh from the current ₹1 lakh, while for urban and semi-urban areas it will be increased to ₹2 lakh from the current ₹1.6 lakh.

The RBI has also announced raising the lending limit to every eligible borrower to ₹1.25 lakh from the current ₹1 lakh.

“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 revise these criteria,” the RBI said in its Statement on Developmental and Regulatory Policies on Friday, adding that guidelines will be soon issued.

Read RBI's fourth bi-monthly monetary policy statement

The income and loan limits to classify an exposure as eligible asset were last revised in 2015.

For development of offshore rupee markets, the RBI also announced allowing domestic banks to freely offer foreign exchange prices to non-residents at all times, out of their Indian books, either by a domestic sales team or through their overseas branches; and permitting rupee derivatives (with settlement in foreign currency) to be traded in International Financial Services Centres.

This is based on the recommendations of the task Force on Offshore Rupee Markets, which submitted its report in July this year.

"The directions for implementing the above two recommendations will be issued in consultation with the Central Government and other regulators," it said.

Published on October 04, 2019
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