RBI relaxes rules to ease liquidity crunch in MFIs

The Reserve Bank of India said on Wednesday banks can classify restructured loans to microfinance companies as a 'special regulatory asset,' a move that the bank said will ease liquidity constraints in the sector.

Mumbai: The Reserve Bank of India said on Wednesday banks can
classify restructured loans to microfinance companies as a 'special regulatory
asset,' a move that the bank said will ease liquidity constraints in the
sector.

These accounts will need to be standard at the time of
restructuring even if they are not fully secured, it said in a notification on
its website.

The central bank also noted that the current problems in the
sector are mainly due to "environmental factors," and not due to
"credit weakness."

Bureau Report

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