Microfinance Loan (RBI Master Direction dated 14th March 2022)

A microfinance loan is defined as a collateral-free loan given to a household having annual household income up to ₹3,00,000. For this purpose, the household shall mean an individual family unit, i.e., husband, wife and their unmarried children.

In exercise of the powers conferred by Section 21, Section 35A and Section 56 of the Banking Regulation Act, 1949; Chapter IIIB of the Reserve Bank of India Act, 1934; and Sections 30A and Section 32 of the National Housing Bank Act, 1987, the Reserve Bank, being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the directions hereinafter specified.

1. Short Title and Commencement

1.1 These directions shall be called the Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022.

1.2 These directions shall be effective from April 01, 2022, subject to stipulations as at paragraphs 5.3 and 9.3.

2. Applicability

2.1 The provisions of these directions shall apply to the following entities:

I. All Commercial Banks (including Small Finance Banks, Local Area Banks, and Regional Rural Banks) excluding Payments Banks;

II. All Primary (Urban) Co-operative Banks/ State Co-operative Banks/ District Central Co-operative Banks; and

III All Non-Banking Financial Companies (including Microfinance Institutions and Housing Finance Companies).

2.2 The entities mentioned at points 2.1(i) to 2.1(iii) above are hereafter referred to as ‘Regulated Entities (REs)’ for the purpose of these directions.


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