RBI issued the circular regarding review of Risk Weights on Microfinance Loans
Commercial Banks (including Small Finance Banks but excluding Regional Rural Banks and Local Area Banks)
It has been decided that microfinance loans in the nature of consumer credit shall also be excluded from the applicability of higher risk weights specified in the circular ibid and shall accordingly, be subject to a risk weight of 100 per cent.
Regional Rural Banks (RRBs) and Local Area Banks (LABs)
All microfinance loans extended by RRBs and LABs shall attract a risk weight of 100 per cent.
The above instructions shall be applicable from the date of issue of this circular in respect of outstanding as well as new microfinance loans. All other instructions of the circulars ibid remain unchanged.
Link – https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12786&Mode=0
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