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FINANCE TO MFIS CO-LENDING ARRANGEMENTS WITH NBFCS
What is the primary purpose of bank lending to Microfinance Institutions (MFIs)?
Banks lend to MFIs so that MFIs can on-lend to the last-mile borrowers who lack direct access to formal banking credit. This helps in financial inclusion by channeling funds to underserved rural and semi-urban populations.
What is the maximum loan tenure allowed for microfinance loans under RBI's 2022 Master Direction?
No maximum tenure is prescribed; lender decides based on repayment capacity.
Under RBI guidelines, what is the priority sector classification of bank loans given to MFIs for on-lending?
Bank loans to MFIs for on-lending to individual borrowers qualify as priority sector lending, specifically under the 'Agriculture' or 'Weaker Sections' sub-categories depending on the end use of funds.
What is the household income ceiling for a borrower to qualify for a microfinance loan?
Annual household income up to Rs. 3 lakh for rural and urban borrowers.
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