The RBI yesterday released a revised framework for microfinance loans. With this new rules, it has put an end to regulated interest rates, bringing about a level playing field between banks and non-bank lenders. Thus it has done away with margin caps that were specifically applicable to non-banking finance company--microfinance institutions. This new framework will be effective 1st April, 2022.
RBI also put in place the definition of microfinance loans, stating that all collateral-free loans, irrespective of end use and mode of application, processing and disbursal, provided to households with an annual income up to Rs 3 lakh shall be considered as microfinance loans.
This means that margin caps, not exceeding 10% for large MFIs with loan portfolios exceeding Rs 100 crore and 12% for the others are no longer applicable.
Following this, Bandhan Bank is among the top five gainers on the BSE since the opening bell today. The stock price rose almost 9% to Rs.288.50, which is very close to its 10% UC of the day at Rs.291.25. Its 52-week high stands at Rs.371.15.