MFIN defers capping lenders

Microfinance Industry Network has reduced the number of lenders per borrower to 3, now effective 1 April

- Gopika Gopakumar

Microfinance Industry Network (MFIN), the self-regulatory organization (SRO) for the sector, has deferred the implementation of limiting the number of lenders to three per borrower to 1 April, giving lenders more time to manage stress and delinquencies, according to two persons aware of the matter.

The sector's SRO had in November introduced the new cap along with a few other guidelines around micro lending. It had made key changes, including reducing the number of lenders to a borrower to three from four earlier, and capping the maximum indebtedness of a borrower at ₹2 lakh, including both micro and unsecured retail loans. These guidelines were supposed to be effective from 1 January 2025.

However, MFIN has decided to extend more time to MFI players to implement the rule around capping the number of lenders, while other rules came into effect as scheduled from Wednesday.