RBI tells MFIs: Time to focus on borrowers’ income stability
Speaking at a microfinance industry network event during the launch of India microfinance review FY 2024-25 earlier this month, RBI deputy governor Swaminathan J said the sector has reached an inflection point after a decade of rapid inclusion driven by Jan Dhan, Aadhaar, UPI and the account aggregator framework, adding that the next phase must focus on depth and quality of use.“The aim is to convert first access into regular use, regular use into stable income, and stable income into a clear route to formal credit,” he said.He urged lenders to capitalise on the flexibility of the 2022 microfinance framework without compromising borrower welfare.
Swaminathan outlined five priorities for the industry: household-level credit decisions, tech-enabled underwriting, transition from mono-product lending to micro-enterprise finance, climate-resilient product design, and responsible use of customer data.
He cautioned about unreasonable pricing, inaccurate bureau reporting, model bias and cyber vulnerabilities hindering the sector’s progress.
