Self-regulatory organisation (SRO) Sa-Dhan has asked its members that its return on assets (RoA) must not exceed 4 percent, Business Standard reported. This move follows Reserve Bank's regulatory whip on four non-bank lenders, including two microfinance institutions.
The NBFCs and microfinance institutions were under the fire for not adhering to fair practice norms and charging “usurious” interest rates.
Also Read | RBI ban on Navi, three more NBFCs leaves fintechs worried
Sa-Dhan, an RBI-appointed SRO overseeing microlenders, has suggested its members to reassess the interest rates applied to customers. An RoA of 3-4 percent is considered appropriate, the report said.
Sa-Dhan has 80-85 NBFC-MFIs among its members. It will collect data on interest rates and related practices to review the loan pricing policies, the report said. The SRO will meet its members at a national conference this week to review the situation.
The RBI on October 17 took action against Asirvad Micro Finance Ltd, Arohan Financial Services Ltd, DMI Finance, and Navi Finserv, citing material supervisory concerns, and asked these entities to cease and desist sanction and disbursal of loans.
The central bank 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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
