Microfinance lending limit raised to Rs 1.25 Lakh

Chennai: The RBI has increased the household income limit as well as the lending limit per borrower for NBFC-MFIs (non-banking financial company—micro finance institutions), thus providing a potential for around 25 per cent incremental growth. But industry observers are apprehensive about the higher risk involved in the growth of average ticket size. The household income limit for borrowers of NBFC-MFIs has been increased from the current level of Rs 1 lakh for rural areas and Rs 1.60 lakh for urban/semi urban areas to Rs 1.25 lakh and Rs 2 lakh, respectively. Further, the lending limit per borrower has been raised from Rs 1 lakh to Rs 1.25 lakh. These measures are expected to boost MFI lending to the bottom of the economic pyramid, RBI said.

“This is a good move reflecting the change in household income since 2015 and allows clients to avail a higher loan amount from RBI regulated financial institutions. Besides this change it will be a win-win situation for the lender and the borrower by providing more room to individual NBFC-MFIs to lend and allow more households access credit,” said Manoj Nambiar, Chairperson, MFIN.