{"id":21426,"date":"2020-09-12T11:10:55","date_gmt":"2020-09-12T11:10:55","guid":{"rendered":"https:\/\/bengalnewstimes.com\/?p=21426"},"modified":"2020-09-12T11:10:55","modified_gmt":"2020-09-12T11:10:55","slug":"rbi-asks-microfinance-institutions-to-learn-from-past-gives-mantra-to-maintain-credit-discipline","status":"publish","type":"post","link":"https:\/\/bengalnewstimes.com\/?p=21426","title":{"rendered":"RBI asks microfinance institutions to learn from past; gives mantra to maintain credit discipline"},"content":{"rendered":"<p><\/p>\n<div>\n<div class=\"article-image\">\n<figure><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden wp-image-2080827 size-full\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/09\/RBI-2.jpg\" alt=\"RBI, reserve bank, credit discipline, overlinding, microlenders\" width=\"660\" height=\"440\" srcset=\"\" sizes=\"auto, (max-width: 660px) 100vw, 660px\"\/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden wp-image-2080827 size-full\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/09\/RBI-2.jpg\" alt=\"RBI, reserve bank, credit discipline, overlinding, microlenders\" width=\"660\" height=\"440\" srcset=\"\" sizes=\"auto, (max-width: 660px) 100vw, 660px\"\/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-2080827 size-full\" src=\"https:\/\/images.financialexpress.com\/2020\/09\/RBI-2.jpg\" alt=\"RBI, reserve bank, credit discipline, overlinding, microlenders\" width=\"660\" height=\"440\" srcset=\"https:\/\/images.financialexpress.com\/2020\/09\/RBI-2.jpg 660w, https:\/\/images.financialexpress.com\/2020\/09\/RBI-2-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2020\/09\/RBI-2-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2020\/09\/RBI-2-401x267.jpg 401w, https:\/\/images.financialexpress.com\/2020\/09\/RBI-2-440x293.jpg 440w, https:\/\/images.financialexpress.com\/2020\/09\/RBI-2-80x54.jpg 80w, https:\/\/images.financialexpress.com\/2020\/09\/RBI-2-313x209.jpg 313w\" sizes=\"auto, (max-width: 660px) 100vw, 660px\"\/><\/noscript><\/noscript><span class=\"article-caption\">MFIs should learn from the past and diversify their portfolio across geographies due to recurring localised disruptions.<\/span><\/figure>\n<\/div>\n<p>The Reserve Bank of India has asked the microfinance institutions to adopt responsible lending practices to ensure that loan amounts are commensurate with the borrower\u2019s ability to repay and that there are no instances of overlending. Building capital buffers and managing liquidity would be crucial for MFIs in fortifying their balance sheets against coronavirus-led disruptions, said <a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/tag\/rbi\/\" rel=\"noopener noreferrer\">RBI<\/a>\u2019s September bulletin. It has been suggested that MFIs should learn from the past and diversify their portfolio across geographies due to recurring localised disruptions. It further said that though the pandemic presents new challenges and significant financial risks for the microfinance sector, it also presents an opportunity to build long-term resilience.<\/p>\n<p>While the efforts to migrate loan collections to digital platforms is believed to be a feasible tool to significantly improve operational efficiency, the RBI asked MFIs to maintain the credit discipline as the risk of spread of misinformation is high at this juncture. The article added that increasing engagement with borrowers through virtual or telephonic means and sensitising staff on fair practices code would go a long way in restoring confidence in borrowers and rebooting the credit cycle.<\/p>\n<p><strong>Also Read:\u00a0<a href=\"https:\/\/www.financialexpress.com\/industry\/banking-finance\/shaktikanta-das-asks-banks-to-reorient-post-pandemic-suggests-to-look-at-these-sunrise-sectors\/2081553\/\" target=\"_blank\" rel=\"noopener noreferrer\">Shaktikanta Das asks banks to reorient post-pandemic; suggests to look at these \u2018sunrise\u2019\u00a0sectors<\/a><\/strong><\/p>\n<p>The central bank has an unparalleled focus on the MFIs as they are specialised institutions extending collateral free loans to low-income groups and are particularly exposed to credit risks. The article said that microfinance in India plays an important role in delivering credit to people at the bottom of the economic pyramid. Also, owing to its grass-roots level connect, microfinance is able to support income generating activities and impact livelihoods in both rural and urban geographies.<\/p>\n<p>Meanwhile, the outstanding amount of loans extended to microfinance borrowers, grew from Rs 1.79 lakh crore as on March 31, 2019 to Rs 2.32 lakh crore as on March 31, 2020. NBFC-MFIs and Scheduled Commercial Banks (SCBs) hold a major chunk of the microfinance portfolio, with a combined share of 72 per cent as on March 31, 2020. The remainder is held by Small Finance Banks (SFBs), NBFCs, and others (including not-for-profit MFIs).<\/p>\n<div class=\"common-bottom-text\">\n<p>Get live <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/\" target=\"_blank\" rel=\"noopener noreferrer\">Stock Prices<\/a> from <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/s-p-bse-sensex-stock-price\/\" target=\"_blank\" rel=\"noopener noreferrer\">BSE<\/a>, <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nifty-50-stock-price\/\" target=\"_blank\" rel=\"noopener noreferrer\">NSE<\/a>, <a href=\"https:\/\/www.financialexpress.com\/investing-abroad\/\" target=\"_blank\" rel=\"noopener noreferrer\">US Market<\/a> and latest NAV, portfolio of <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">Mutual Funds<\/a>, calculate your tax by <a href=\"https:\/\/www.financialexpress.com\/income-tax-calculator\/\" target=\"_blank\" rel=\"noopener noreferrer\">Income Tax Calculator<\/a>, know market\u2019s <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-gainers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Gainers<\/a>, <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-losers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Losers<\/a> &amp; <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/equity-funds\/\" target=\"_blank\" rel=\"noopener noreferrer\">Best Equity Funds<\/a>. Like us on <a href=\"https:\/\/www.facebook.com\/thefinancialexpress\" target=\"_blank\" rel=\"noopener noreferrer\">Facebook<\/a> and follow us on <a href=\"https:\/\/twitter.com\/FinancialXpress\" target=\"_blank\" rel=\"noopener noreferrer\">Twitter<\/a>.<\/p>\n<p class=\"telegram-text\"><img loading=\"lazy\" decoding=\"async\" class=\"telegrma_img\" src=\"https:\/\/images.financialexpress.com\/2020\/04\/telegram.png\" alt=\"\" width=\"24\" height=\"24\" style=\"margin: 0px 5px 4px 0px; float: left;\"\/>Financial Express is now on Telegram. <a href=\"https:\/\/t.me\/TheFinancialExpressOnline\" target=\"_blank\" rel=\"noopener noreferrer\">Click here to join our channel<\/a> and stay updated with the latest Biz news and updates.<\/p>\n<\/div>\n<\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/><a href=\\\"https:\/\/www.financialexpress.com\/industry\/banking-finance\/rbi-asks-microfinance-institutions-to-learn-from-past-gives-mantra-to-maintain-credit-discipline\/2081570\/\\\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>MFIs should learn from the past and diversify their portfolio across geographies due to recurring localised disruptions. The Reserve Bank of India has asked the microfinance institutions to adopt responsible lending practices to ensure that loan amounts are commensurate with the borrower\u2019s ability to repay and that there are no [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":21427,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[36],"tags":[],"class_list":["post-21426","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking-business"],"jetpack_featured_media_url":"https:\/\/bengalnewstimes.com\/wp-content\/uploads\/2020\/09\/RBI-2.jpg","_links":{"self":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts\/21426","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=21426"}],"version-history":[{"count":0,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts\/21426\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/media\/21427"}],"wp:attachment":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21426"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21426"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21426"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}