MFIs reduce lending rates as RBI voices concerns
microfinance lenders have reduced lending rates in the past couple of months amid heightened regulatory scrutiny on the pricing policy adopted by these financiers that service the bottom of the consumer pyramid.
The Reserve Bank of India (RBI) was conducting a scrutiny over the past six months or so, and that culminated into the decision to bar errant lenders from doing business from October 21 for charging «excessive» interest rate spreads over their cost of funds.
Both Arohan Financial Services and Asirvad Micro Finance — the two NBFC-MFIs penalised — have submitted fresh plans to the regulator. Arohan promised to reduce rates by about 200 basis points while Asirvad said it would lower rates by around 300 bps once they are allowed to resume business, people familiar with the matter said.
Among the bigger ones which have reduced lending rates since September are Annapurna Finance and Spandana Sphoorty Financial Services while Muthoot Microfin is likely to lower rates this month.
Several others are likely to review their pricing policy this month.
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