BANKING AFFAIRS

Detailed explanation-1: -Qualifying Assets: Loan disbursed without collateral by an NBFC-MFI to a borrower with a household annual income not exceeding Rs. 1, 00, 000 (rural) or Rs. 1, 60, 000 (urban and semi-urban) and total indebtedness not exceeding Rs.

Detailed explanation-2: -3.1 A microfinance loan is defined as a collateral-free loan given to a household having annual household income up to ₹3, 00, 000.

Detailed explanation-3: -The RBI has also revised the criteria for NBFCs who do not qualify as NBFC-MFIs to extend microfinance loans up to 25 per cent of their total assets from 10 per cent earlier.

Detailed explanation-4: -Ans. All collateral-free loans to individual/s belonging to low-income households, i.e., households having annual income up to ₹3, 00, 000 are treated as microfinance loans.

Detailed explanation-5: -In December 2021, RBI had fixed the applicable average base rate to be charged by NBFC-MFIs to their borrowers for the quarter beginning January 1, 2022, at 7.89 percent. MFIN, the association for microfinance entities has welcomed the harmonised regulations for the sector announced by RBI.