Friday, 3 February 2017

NBFC-MFIs to charge rates based on previous quarter

The RBI has said that non-banking financial company micro financial institutions (NBFC-MFIs) shall ensure that the average interest rate on loans sanctioned during a quarter does not exceed the average borrowing cost during the preceding quarter plus the margin. The rate charged by NBFC-MFIs depended on average borrowing cost during a financial year plus margin. The RBI in a notification said that the change has been taken as now the average base rate of banks is published on a quarterly basis, than earlier practice of yearly publication. The rates of interest charged by NBFCs are not regulated by the RBI.

However, in interest of customers, as per RBI regulations, the Board of NBFCs are required to lay out appropriate internal principles and procedures in determining interest rates and processing and other charges.

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