The Reserve Bank of India temporarily relaxed rules for bank loans to the microfinance sector, which will allow banks to continue lending to the embattled industry, and unveiled proposed guidelines for the lenders to the poor.
“The fact that the RBI is making an exception on behalf of MFIs (microfinance institutions) and taking special steps to support the industry is a good sign from a direction point of view,” said Anurag Agarwal, senior vice president at Intellecap
RBI stated as the “The Sub-Committee has cautioned that while recognising the need to protect borrowers it is also necessary to recognise that if the recovery culture is adversely affected and the free flow of funds in the system interrupted, the ultimate sufferers will be the borrowers themselves.”
