The Reserve Bank of India's (RBI) action against a few NBFC-MFI over the excessive pricing on loans is not an industry wide issue, but an issue with certain entities, Alok Misra, chief executive officer of MicroFinance Institutions Network (MFIN), said in an exclusive interaction.
Misra said that MFIN is regularly updating members about regulated entities on the interest rates.
"This is not an industry wide issue, but an issue of few entities. We are regularly updating member REs interest rates," Misra told Moneycontrol.
On October 17, the RBI took action against four NBFCs and NBFC-MFI citing material supervisory concerns, and asked these entities to cease and desist sanction and disbursal of loans.
These companies are Asirvad Micro Finance Ltd, Arohan Financial Services Ltd, DMI Finance, and Navi Finserv, according to the central bank's notification.
Also read: RBI ban on Navi, three more NBFCs leaves fintechs worried
The regularor said that it has observed concerns in the pricing policy of these companies in terms of their weighted average lending rate (WALR) and the interest spread charged over their cost of funds, which are found to be excessive and not in adherence with the regulations, a statement said.
On this issue, Misra said that MFIN is still evaluating the issues with the affected entities.
"We are still evaluating the things with the affected REs and after that we will be able to comment," he said.
RBI governor Shaktikanta Das, on June 7, had cautioned microfinance lenders over the higher pricing charged on loans.
"It has also been observed in some micro finance institutions and NBFCs that the interest rates on small value loans are high and appear to be usurious," Das had said.
Das added that the regulatory freedom enjoyed by the REs in respect of interest rates and charges should be used judiciously used to ensure fair and transparent pricing of products and services.
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