A level playing field is on the cards for regulatory guidelines in the microfinance sector, according to a Reserve Bank of India move to come out with a consultative document.
RBI Governor Shaktikanta Das on Friday said the consultative document will look to harmonise the regulatory frameworks applicable to various regulated lenders – NBFC MFIs, banks, small finance banks (SFB) and non-banking finance companies (NBFC) working in the microfinance space. The document is expected in March.
“It will augur well for the sector as a whole and further safeguard the interests of the customers. MFIN looks forward to working closely with the RBI on this important initiative,” MFIN Chief Executive and Director Alok Misra said in a release.
Considering the diversity of players in microfinance today, it is the need of the hour, and MFIN has been proactively working on this through its code of responsible lending (CRL).
The industry association has also requested the Reserve Bank of India on the need for asset class-based regulation, Misra said.
MFIN has developed the ‘Code of Responsible Lending (CRL) in Micro-credit’ to bring different regulated entities, including NBFC-MFIs, banks, SFBs, NBFCs and non-profit/Section 8 MFIs, to agree and adopt a uniform common code for customer conduct.
As of now, the CRL has 113 signatories, representing 70 per cent of the market, the release said.