Mumbai, May 5 (IANS) The Reserve Bank of Indian has determined to enable the classification of priority sector lending for loans given by small finance banks (SFB) to micro-finance establishments (MFI) for on-lending to people.
The resolution has been taken to handle the liquidity problems with MFIs amid the extreme Covid disaster.
During a digital handle on Wednesday, RBI Governor Shaktikanta Das mentioned: “In view of the fresh challenges brought on by the pandemic and to address the emergent liquidity position of smaller MFIs, SFBs are now being permitted to reckon fresh lending to smaller MFIs (with asset size of up to Rs 500 crore) for on-lending to individual borrowers as priority sector lending.”
This facility will be accessible up to March 31, 2022.
At current, lending by Small Finance Banks (SFBs) to Micro Finance Institutions (MFIs) for on-lending isn’t reckoned for priority sector lending (PSL) classification.
Bank credit score will be permitted up to 10 per cent of the financial institution`s whole priority sector portfolio as on March 31, 2021, mentioned an RBI round.
Loans disbursed beneath the scheme will proceed to be classified beneath priority sector until the date of reimbursement or maturity whichever is earlier.
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