The Reserve Bank of India issued a circular revising the qualifying assets criteria for Non-Banking Financial Companies – Microfinance Institutions (NBFC-MFIs) under its Regulatory Framework for Microfinance Loans. The change aligns the definition of NBFC-MFIs’ “qualifying assets” with the framework’s definition of “microfinance loans” and sets a minimum qualifying assets threshold. Under the revised criteria, qualifying assets must constitute at least 60% of total assets (net of intangible assets) on an ongoing basis. If an NBFC-MFI fails to maintain this minimum for four consecutive quarters, it must approach the Reserve Bank with a remediation plan for the Reserve Bank to take a view on the matter; the revised provisions apply with immediate effect and the Master Direction will be updated accordingly.
Reserve Bank of India 2025-06-06
Reserve Bank of India tightens NBFC-MFI qualifying assets criteria with a 60% minimum and remediation requirement after four quarters of breach
The Reserve Bank of India revised the qualifying assets criteria for Non-Banking Financial Companies – Microfinance Institutions (NBFC-MFIs) to align with the definition of "microfinance loans" under its Regulatory Framework. Qualifying assets must now constitute at least 60% of total assets, excluding intangible assets, on an ongoing basis. Non-compliance for four consecutive quarters requires a remediation plan submission to the Reserve Bank.