RBI Governor Shaktikanta Das recently met the chiefs of non-banking finance companies (NBFCs) in the micro lending segment to take stock of the situation. Das discussed the current economic situation and the extent of credit that the microfinance institutions (MFIs) were able to provide. He also sought information on whether the companies were able to meet their funding requirements and the extent of defaults that they were seeing.
MFIs have been the worst-hit segment in NBFCs with gold loans and housing being among best performers.The stress in the sector surfaced after the RBI lifted the moratorium that was introduced in March, 2020 after the COVID-19 outbreak.
Recognising the key role of NBFC-MFIs in making credit accessible at grassroots level, RBI Governor stressed the RBI’s expectations in terms of the companies maintaining their business resilience and managing risks prudently. He advised NBFC-MFIs to pay focused attention on strict adherence to fair practices code, improve customer grievance redress mechanism and strengthen their IT systems in the interest of the institutions and their customers.