RBI revises risk weights on Microfinance loans
Microfinance loans have now been excluded from this category and will instead be subjected to a risk weight of 100 percent.
Microfinance loans have now been excluded from this category and will instead be subjected to a risk weight of 100 percent.
The alarming spike in asset quality deterioration at Muthoot Microfin is more than just a company-specific issue; it’s a red flag for India’s microfinance sector.
The latest concerns from within the MFI industry itself—circulated in a candid plea—paint a grim picture. In several locations, over 30 institutions, including banks, NBFCs, cooperative societies, and informal lenders, are all aggressively lending to the same poor households.
The distress caused by multiple lending is becoming increasingly evident. Reports of harassment, coercive recovery practices, and even suicides among borrowers in rural India have been on the rise. Karnataka, in particular, has seen a surge in complaints against MFIs, with farmers and other borrowers alleging relentless pressure to repay debts
India’s microlending industry witnessed slower growth and recovery problems in the first quarter of the financial year due to multiple industry factors, said industry association Sa-Dhan in a press release.
For microlenders in India, it’s time to pause and reflect. There are troubling signs that the issues which nearly collapsed