"MFIN Postpones New Rule to Limit Lenders to 3 per Borrower, Effective April 1, 2025.

Banking & Finance

In January 2025, the Microfinance Institutions Network (MFIN), the self-regulatory organization (SRO) for the microfinance sector based in Mumbai (Maharashtra), announced the postponement of its new rule that limits the number of lenders to 3 per borrower, down from 4, to better manage microfinance risks.


      - Initially set to take effect on January 1, 2025, the implementation of this rule has been postponed to April 1, 2025.

      - The regulation aims to ensure better financial management and prevent over-indebtedness.

     

Main Point :-   (i) The postponement is to allow financial institutions adequate time to adapt their Information Technology (IT) systems and business rule engines for a smoother implementation of the new rule.

      (ii) Other regulations, such as capping outstanding loans at Rs. 2 lakh per borrower and halting lending to delinquent customers, took effect on January 1, 2025. MFIN also directed its members to stop providing loans to customers whose overdue amounts exceed ₹3,000 and have been pending for more than 60 days.


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