Business Today
Loading...

MFIs seek revision in margin cap

In a circular issued by the RBI on August 3, the caps on margin were revised to 10 per cent for large MFIs (loans portfolios exceeding Rs 100 crores) and 12 per cent for less than Rs 100 crore.

twitter-logoPTI | August 21, 2012 | Updated 22:48 IST

Microfinance Institutions Network (MFIN), a self regulatory body of MFIs, has decided to ask the Reserve Bank to fix the margin cap for individual loan to borrowers at 12 per cent, instead of 10 to 12 per cent.

MFIN CEO Alok Prasad said the body will soon be approaching the RBI with the request as the new cap will be challenging for the microfinance sector.

The interest rate cap on individual loans given by MFIs is fixed at 26 per cent.

In a circular issued by the RBI on August 3, the caps on margin were revised to 10 per cent for large MFIs (loans portfolios exceeding Rs 100 crores) and 12 per cent for less than Rs 100 crore.

The average interest paid on borrowings and charged by the MFI are to be calculated on average monthly balances of outstanding borrowings and loan portfolio, respectively, the RBI had said in the circular.

"What the industry is saying is that the earlier position of 12 per cent which was there before August 3 circular should be restored. The industry is asking to maintain the status quo ante," Prasad told reporters here.

  • Print
  • COMMENT
BT-Story-Page-B.gif
A    A   A
close