Innovation, Research must break silos, Partner with Industry: MoS (See 'Corp Brief') Regional Conference of Skill Ministers - Kaushal Manthan Held in Chandigarh (See 'Corp Brief') Board to Report what's Right what's Not (See CORP EINSICHT) India, Bhutan sign MoU on Technical Cooperation in Agriculture and Allied Sectors (See 'Corp Brief') IPR - Virtual presence, through which commercial transactions can be conducted, is equivalent to physical presence, thereby establishing valid cause of action: HC (See 'Legal Desk') IPR - Anti-dissection rule is well-established legal principle that requires trademarks to be evaluated in their entirety: HC (See 'Legal Desk') SARFAESI - Writ petition assailing proceedings u/s 13(3) sustained, as petitioner's representation u/s 13(3A) not properly considered & compliance with Section 14(1)(b) not met with: HC (See 'Legal Desk') EPFO hosts former Cabinet Secretary (See 'Corp Brief') Companies Act - CPC provisions not applicable to criminal proceedings under CrPC; review application under CPC not maintainable & could not have been entertained by High Court: SC (See 'Legal Desk') DAHD issues Guidelines for Welfare of Working Equines on Pilgrimage Routes (See 'Corp Brief') Companies Act - Review petition not mantainable where grounds for review were available at time of original hearing & could have been raised but were intentionally omitted to mislead court & delay the judgment: SC (See 'Legal Desk') CCI approves acquisition of shares by Multiples Private Equity Fund in V.I.P. Industries (See 'Corp Brief') CCI okays additional 40% shareholding by PSA India Pte in PSA Bharat (See 'Corp Brief') A&C - Pendency of parallel investigations by CBI or ED into allegations of fraud does not bar arbitrator from adjudicating dispute: HC (See 'Legal Desk') CRIT Centres advancing India's trade interests: Commerce Secretary (See 'Corp Brief') Chouhan addresses Wheat and Barley Research Workers Workshop in Gwalior (See 'Corp Brief') IBC - Supreme Court's judgment in State Tax Officer v. Rainbow Papers Ltd cannot be extended to all government dues in absence of statutory charge created under law without exceptions: NCLAT (See 'Legal Desk') India-South Africa Joint Working Group on Agriculture meets virtually (See 'Corp Brief') Fiji PM visits UIDAI Headquarters (See 'Corp Brief') SAIL supplied Critical-Grade Steel for INS Udaygiri & INS Himgiri (See 'Corp Brief') NHAI launches 'Project Aarohan' to support education for kids of Toll Plaza staffers (See 'Corp Brief') IPR - Merely adding prefix/ suffix to existing mark does not make offending mark any different/ distinct: HC (See 'Legal Desk') HM addresses Vibrant Villages Programme workshop (See 'Corp Brief') India Post & IPPB driving last-mile banking: MoS (See 'Corp Brief') MoS releases RTI Journal and launches E-Journal on NFICI Website (See 'Corp Brief') IPR - Stringent criteria must be applied for purpose of assessing and awarding compensation, in situations such as custodial death or torture: HC (See 'Legal Desk') Fly ash management in focus as Railways & NTPC bring together key stakeholders in Noida (See 'Corp Brief') MoPSW launches MAR-a-THON 2025 at IIT Madras to Foster Maritime Innovation (See 'Corp Brief') FoIR organises Online Session on TRAI's Framework for Rating of Properties (See 'Corp Brief') IREDA signs Performance MoU with MNRE, Rs.8,200 Crore Revenue Target for FY 2025-26 (See 'Corp Brief') PFRDA applauds banking fraternity's pivotal role in pension outreach (See 'Corp Brief') C-DOT engineers are also guardians of India's digital border: MoS (See 'Corp Brief') Companies Act - After having obtained and utilised financial facilities, debtor company cannot, for first time, in reply to winding up petition, raise defence when no such plea was raised earlier: HC (See 'Legal Desk') State Govt to develop People-Centric Infrastructure: Sonowal (See 'Corp Brief') DIT, Manipur & NeGD conduct workshop titled 'AI for Good Governance' (See 'Corp Brief') India pauses Postal Services to USA (See 'Corp Brief') IPR - Taking unfair advantage of reputation and goodwill of Harley-Davidson's trademarks/artistic works, calls a case of trademark and copyright infringement: HC (See 'Legal Desk') India rapidly advancing in breakthrough technologies: PM (See 'Corp Brief') India laying foundations to emerge as global MedTech hub: Secy, Pharmaceuticals (See 'Corp Brief') IPR - Dishonest adoption of existing mark to trade upon established goodwill and reputation, and continuation of such registration is contravention of Sec 11 & 18 of Trademarks Act, calling for its cancellation u/s 57 of Act: HC (See 'Legal Desk')

Definition of Microfinance Loans simplified; various restrictions on loans eased: MoS

Published: Aug 06, 2025

By TIOLCorplaws News Service

NEW DELHI, AUG 06, 2025: NATIONAL Bank for Agriculture and Rural Development (NABARD) and Reserve Bank of India (RBI) have undertaken various interventions to promote financial literacy and awareness of rural population, including microfinance borrowers.

This is promoted through following initiatives:

i. NABARD has been providing financial support for conduct of Financial and Digital Literacy Camps through rural bank branches and Financial Literacy Centres (FLCs) in areas with limited awareness. These programmes entail generating awareness on various banking products, social security schemes of Government of India, digital banking, mobile banking, cyber security, etc.

ii. Centre for Financial Literacy (CFL) Project has been initiated by RBI since 2017 with an objective to adopt community-led innovative and participatory approaches to financial literacy. A total of 2,421 CFLs have been set up across the country as on March 31, 2025 with one CFL covering three blocks on an average 

iii. NABARD also sponsors Village Level Programmes (VLPs) which are conducted with the support of banks and State Rural Livelihoods Missions (SRLMs) for a better interface between bankers and Self-Help Groups (SHGs) to facilitate opening of SHG accounts, their credit linkage and regular loan repayments, thereby facilitating financial inclusion at the village level.

The following steps have been taken by RBI for enabling ease of access to credit (in the microfinance sector):

i. The definition of microfinance loan has been simplified and various quantitative restrictions on loans given by NBFC-MFIs have been removed, including limits on loan amount in a particular cycle and minimum tenure for loans over a particular threshold. Presently, all collateral-free loans given to a household having annual household income up to ?3,00,000 are considered as microfinance loans.

ii. Erstwhile requirement of providing minimum 50% loans for income generation purposes has been dispensed with, considering the need of credit for medical, educational and income smoothening purposes.

Further, RBI has taken following steps to enhance borrower protection:

i. A ceiling of 50% on the monthly loan repayment obligations as a percentage of monthly income has been prescribed to protect customers from over in debtedness.

ii. RBI has issued specific guidelines for recovery processes which has to be followed by REs which ensure protection to the borrowers against harsh recovery methods. REs are required to have a dedicated mechanism for redressal of recovery related grievances.

RBI has informed that interest rates charged to microfinance borrowers by all the REs, including banks which had access to low-cost funds, hovered around the regulatory ceiling introduced by RBI from time to time. Hence, on March 14, 2022, a revised principle-based regulatory framework for microfinance loans was issued which deregulated the interest rates on such loans with an intent to let the competitive forces of the market bring down interest rates over a period of time. Hence, REs are required to have a board-approved interest rate policy with clearly delineated components. Further, the RBI's regulations prescribe that interest rates and other charges shall not be usurious.

SROs for the microfinance sector, viz. Sa-Dhan and Microfinance Industry Network (MFIN), play a major role in strengthening compliance culture among their members viz. Micro Finance Institutions (MFIs) including NBFC-MFIs and also provide a consultative platform for policy making. One of the functions of SROs is continuous monitoring of the activity and level of compliance of their members with the regulations. Through constant interaction with the Regulator and submission of periodic/ad-hoc information, the SROs provide insights on the industry practices including non-compliances observed which help appropriate regulatory and supervisory interventions.

Further, Sa-Dhan and MFIN, have issued guardrails for their members, inter alia, capping the total indebtedness of a borrower as well as limiting the number of lenders that can give loans to a single borrower. Such interventions aid in reducing the indebtedness of the borrowers.

RBI has issued guidelines on credit information reporting by credit institutions (CIs) to credit information companies (CICs). CIs are required to submit the income and credit data pertaining to microfinance borrowers to CICs. Apart from household income, the details of all the loans availed by such borrowers are published in the credit information report. CIs utilise such information for assessing the indebtedness of the borrowers thereby preventing over indebtedness by capping repayment obligations within the regulatory limit of 50% of monthly household income.

This information was given by Minister of State in the Ministry of Finance Pankaj Chaudhary in a written reply to a question in Rajya Sabha yesterday.

TIOL CORP SEARCH

TIOL GROUP WEBSITES