CURRENT AFFAIRS

Detailed explanation-1: -8.2 Under the earlier guidelines, an NBFC that does not qualify as an NBFC-MFI, cannot extend microfinance loans exceeding 10 per cent of its total assets. The maximum limit on microfinance loans for such NBFCs (i.e., NBFCs other than NBFC-MFIs) now stands revised to 25 per cent of the total assets.

Detailed explanation-2: -About NBFC MFI Microfinance institutions or MFIs are financial institutions that provide loans and other financial services to poorer sections of society. Usually, their area of operations of extending small loans are rural areas and among low-income people in urban areas.

Detailed explanation-3: -Service Enterprises - Bank loans up to Rs 5 crore per unit to Micro and Small Enterprises and Rs 10 crore to Medium Enterprises engaged in providing or rendering of services and defined in terms of investment in equipment under MSMED Act, 2006.

Detailed explanation-4: -As per the extant regulations, every NBFC is required to maintain a minimum capital ratio of 15 per cent of its aggregate risk-weighted assets (including both on and off- balance sheet items). To further strengthen their capital position, the PCA framework for NBFCs will be made effective from October 1, 2022.

Detailed explanation-5: -Under the new guidelines, RBI has also put a cap on the maximum repayment value to 50% of the monthly household income to ensure customers are not burdened. Thus, if the household income is ₹3 lakh, the maximum loan instalment a borrower can pay must not exceed ₹1.5 lakh per year.