Some MFIs, shadow banks charging high rates on small value loans, says RBI governor

The governor additionally highlighted that the regulatory freedom with the regulated entities should be used judiciously to ensure fair and transparent pricing of products and services.

Some microfinance institutions and non-banking financial companies (NBFC) are charging high interest rates on small-value loans, the Reserve Bank of India (RBI) Governor Shaktikanta Das pointed out in the monetary policy review on June 7.

“It has been observed that in some MFIs and NBFCs, interest rates on small value loans are high and appear to be usurious,” Das said.

In his monetary policy committee (MPC) statement, the governor highlighted that the regulatory freedom with the regulated entities should be used judiciously to ensure fair and transparent pricing of products and services.

The rate-setting panel of the central bank decided to keep the repo rate unchanged at 6.5 percent with a majority of 4:2, the governor said at the second bi-monthly monetary policy for the current financial year, adding that the RBI has decided to maintain its stance of withdrawal of accommodation.

Also read: RBI projects real GDP growth at 7.2% for FY25

"The pattern of world crisis continues, but India is seeing positive growth. But we need to stay vigilant against new challenges," Das said. The RBI sees bright prospects of sustained high growth. It will gear up to be future ready to enhance India's global positioning, he added.