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Loan will be available without guarantee on annual income up to Rs 1.25 lakh

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New Delhi . It can be easier and cheaper to take loans from microfinance institutions and non-banking financial companies (NBFCs). For this, the Reserve Bank of India has proposed a new regulatory framework for the country’s microfinance institution. According to this, no penalty will be levied on the prepayment of the loan. Also, the borrowers will not have to keep any kind of collateral. This will also make it easier for microfinance institutions to disburse loans. In a draft resolution related to the regulation, the Reserve Bank has advised that a definition of microfinance credit for all the entities under the control will be fixed.

No interest rate limit
At present, there is a minimum and maximum limit of interest rate for microfinance institutions. It is calculated under the rules of the Reserve Bank, but according to the proposal, there will be no interest rate limit in the new regulation. In this regard, experts say that customers with a better record will benefit because they can be offered lower interest rates. At present, they cannot offer interest less than a limit.

Loan without guarantee
The Reserve Bank has said that microfinance loans mean loans without collateral or guarantee. People whose annual income ranges from Rs 1.25 lakh to Rs 2 lakh per annum can take microfinance loans. People living in rural and towns should get such loan easily. At present, Micro Finance disburses loans ranging from 10 thousand to five lakh rupees.

Only 50 percent EMI-
According to the document, one cannot be forced to repay more than 50 per cent of one’s total income in case of repayment on all existing loans, i.e., the total EMI can be only 50 per cent of your income. Experts say that at present, microfinance institutions charge 70 to 80 percent EMI from customers.

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