As bank loans to MFIs are mostly unsecured, the Indian Banks Association had requested RBI in December to relax its restructuring guidelines for the MFI sector.
Pranab Mukherjee said the government proposes to move various legislative Bills related to financial sector reforms.
After micro finance, micro housing is becoming a buzz word. The sector is not only attracting domestic companies, but also luring foreign financial service firms and institutional players.
There are allegations that MFIs are charging exorbitant interest rates and using strong-arm tactics to recover the loans.
He added however that reasonable profit must be there at the bottom of the pyramid as the business has to be self-sustaining
In the Union Budget for Financial Year 2023-24 (FY24), Finance Minister Nirmala Sitharaman had held forth on the need for better governance and investor protection in the banking sector. She had proposed certain amendments to the Reserve Bank of India Act (RBI Act), 1934; the Banking Regulation Act (BR Act), 1949; and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.
The government is set to ask PSBs to expeditiously introduce repo-rate linked products "to step up affordable credit".
The finance ministry is not in favour of revising norms for external commercial borrowing or hiking the limits beyond $500 million in the near future, but will allow micro-finance institutions to tap overseas markets to raise up to $5 million.
MUDRA Bank will have a corpus of Rs 20,000 crore.
Commercial banks have turned cautious in lending to smaller microfinance institutions (MFIs), which has compelled the latter to borrow from non-banking financial companies (NBFCs) at much higher rates. Recently Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao slammed micro lenders for increasing their margins "disproportionately" and said these lenders were quick to pass on the increased cost to the borrowers but reluctant to pass on the benefits under the new regime, where margins are not capped.
Gold prices hit record high in the third week of March as fears of bank collapses and high inflation led investors to the traditional safe haven. Gold prices are often inversely correlated to dollar strength because the international price is dollar-denominated. The Federal Reserve's (Fed's) stance indicates that the dollar may appreciate further since it is prepared to keep pushing up policy rates. But demand for gold is also up - the World Gold Council claims central banks are buying in addition to private demand.
Investors are shying away from securitised loans of micro-finance institutions (MFIs), as the ordinance issued by the Andhra Pradesh government has slowed recoveries, creating uncertainty around the underlying portfolio.
The government on Friday doubled the limit of Mudra loan amount under the Pradhan Mantri Mudra Yojana (PMMY) to Rs 20 lakh from Rs 10 lakh under a new 'Tarun Plus' category to promote entrepreneurship in the country.
MFIs were allegedly charging interest rates of over 30 per cent.
The need for a manufacturing policy, reining in food inflation and raising investment in the country were among key suggestions given by economists who met Finance Minister Nirmala Sitharaman and senior ministry officials in the first round of pre-Budget consultations on Friday.
'With a very stable technology with limited functionalities, a large network has spanned out.'
In a bid to stop stop micro-finance institutions (MFIs) from charging usurious rate of interest, the Finance Ministry has asked state-owned banks to ensure that such institutions do not charge a loan rate of above 24 per cent.
Micro-finance institutions (MFIs) are planning to take legal action against YES Bank's move to recall a part of its loans to them.
These are the highlights of the Union Budget 2025-26 presented by Finance Minister Nirmala Sitharaman in Parliament on Saturday.
At a time when the Micro Finance Institutions (MFIs) have drawn flak due to steep interest rates charged by them, the Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty has categorically stated that such institutions cannot play any role in financial inclusion.
You can't ask a current borrower to finance your growth, says RBI memeber Yezdi H Malegam.
'We need to be far more careful given the fact that while this is group lending, it's essentially unsecured.'
It is 10 years since Bandhan Financial Services became the first microfinance institution (MFI) to receive the universal bank licence. A year later, in 2015, it started operations. Bandhan's entry into banking was seen as a vote of confidence by the Reserve Bank of India (RBI) for the country's microfinance sector. Subsequently, the RBI awarded small finance bank licences to nine MFIs.
Andhra Pradesh Governor ESL Narasimhan met Congress president Sonia Gandhi on Friday evening to reportedly discuss the administrative and political situation in the state.The two discussed the expansion of the state cabinet, the ordinance on micro-finance institutions, trimming the administration and preparing for political developments after the Justice Sri Krishna Committee submits its report on the creation of Telangana state.
The government on Tuesday said it is not in favour of regulating interest rates charged by micro-finance institutions but emphasised that there should be transparency in amount they charge from the borrowers.
TDP President N Chandrababu Naidu on Tuesday asked women not to repay loans they secured from Micro-Finance Institutions (MFIs) till the government brought in a regulator to keep a tab on the financing business.
MFI tactics have even prompted Andhra Pradesh Cabinet to approve an ordinance to rein them in.
The loan by the banks to MFIs for on-lending to small borrowers will fall under 'priority sector' category if the RBI guidelines are met.
"Bank loans to all MFIs, including NBFCs working as MFIs on or after April 1, 2011, will be eligible for classification as priority sector loans if, and only if, they conform to the regulations formulated by the Reserve Bank," RBI Governor D Subbarao said in the 'Monetary Policy Statement for 2011-12'.
Finance Minister Nirmala Sitharaman on Tuesday announced the doubling of the upper limit of Mudra loans to Rs 20 lakh to promote entrepreneurship in the country. "The limit of Mudra loans will be enhanced to Rs 20 lakh from the current Rs 10 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the 'Tarun category', she said while presenting the Budget in the Lok Sabha.
Gurumani have been roundly criticised for booking eye-popping profits on share sales of exercised options.
Mudra Bank being launched on April 8.
In an effort to boost commodity trading in the country, the much-awaited amendments to the Forward Contract and Regulations Act of 1952 will happen during the Budget session of the Parliament.
A week after SKS Microfinance was listed on BSE, many of the employees are finding themselves in the league of millionaires.
Finance Minister P Chidambaram on Thursday ruled out changes in tax laws for micro-finance institutions and allowing foreign equity in the sector, but kept options open for a separate fund for them.
Rural populations will get will get employment in the industrial corridors following amendments to the land acquisition bill.
The Reserve Bank of India (RBI) has barred four non-banking finance companies (NBFCs), including two microfinance institutions (MFIs), from sanctioning and disbursing loans for charging exorbitant interest rates to the borrowers. These four entities are Asirvad Microfinance, Arohan Financial Services (also an MFI), DMI Finance, which provides personal, consumption, and micro, small and medium enterprises loans, and Flipkart co-founder Sachin Bansal's Navi Finserv, which offers home and personal loans. The ban will take effect on October 21 to "facilitate closure of transactions in the pipeline", the regulator said in a statement.
Union Bank of India will bring banking services to the doorsteps of over 2.5 lakh hawkers in Mumbai by partnering with their association and FINO Fintec, a micro finance institution.
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