India: RBI Cautions Micro Lenders, NBFCs Against High, ’Usurious’ Interest Rates

Source: mint

Mumbai: The Reserve Bank of India (RBI) on Friday said it has come across instances of micro lenders and non-bank financiers charging high, 'usurious' interest rates on small-value loans, reminding them to judiciously use their pricing power. 

The regulator reiterated that customer protection is one of its top priorities. 

This comes two years after the regulator removed pricing caps from MFI (microfinance institution) loans, instead relying on these lenders to have policies that are approved by their boards. In March 2022, RBI said banks, non-banks and micro lenders must have a policy on pricing of microfinance loans. While such internal policies were mandated to include a ceiling on the interest rate and all other charges on microfinance loans, the cap would no longer be decided by RBI.