The Reserve Bank of India (RBI) on 2 December 2011 approved the creation of a separate category of non-banking financial companies for the microfinance institution (MFI) sector. The central bank also specified that such institutions need to have a minimum net owned fund of Rs 5 crore.
An RBI-appointed panel headed by YH Malegam had earlier recommended setting up of a special category of NBFCs operating in the micro finance sector. The panel had suggested a minimum net worth of 15 crore for an entity to qualify as an NBFC-MFI.
The RBI highlighted that the NBFC-MFIs should have a minimum net worth of Rs 5 crore. However, for those operating in the North-Eastern states, the slab was kept at Rs 2 crore.
The RBI had in its second quarter policy review in October 2011 approved of setting up of this category of specialised financial companies which would cater to low-income groups.
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