RBI has recently taken strict action against some NBFCs and MFIs. He is accused of violating many other rules including charging high interest on loans from customers. In this regard, Alok Mishra, CEO of Microfinance Institutions Network (MFin) has tried to clarify the situation. He has said that RBI’s action against some NBFC-MFIs for charging high interest on loans does not mean that this problem is in the entire industry. He said that MFin regularly keeps giving information about interest rates to the members.
While talking to Moneycontrol, Mishra said that this is not an issue of the entire industry. This is limited to just a few NBFCs or MFIs. RBI had taken action against four NBFCs and NBFC-MFIs on October 17. He was asked not to sanction or disburse the loan. These include Asirvad Micro Finance, Arohan Financial, DMI Finance and Navi Finserv.
RBI has said that irregularities have been found in the pricing policies of these companies, especially in their Weighted Average Lending Rate (WALR). Shortcomings were also found in the interest spread charged on funds over cost. These have been found in large numbers. This is not according to the rules. On this matter, Mishra said that MFIN is talking to the companies against whom action has been taken. He said that something can be said about this only after understanding the entire matter.
On June 7, RBI Governor Shaktikanta Das had warned MFIs against charging high interest on loans. He had said that it has been observed that many MFIs and NBFS are charging higher interest rates on small amount loans. He had also said that the freedom given to regulated entities in matters of interest should be used properly.
