How Should the RBI Respond to the Microfinance Crisis?
Debt distress among microfinance borrowers is on the rise, sufficiently so that it may be characterised as a crisis for the sector. This is driven by factors across the supply- and demand-sides, as well as factors inherent in the nature of the credit cycle, where periodic booms and busts have been present throughout history. To address this, we propose two sets of recommendations for the regulator: a set of recommendations that can be initiated in the short-term and another set that can be initiated over the medium-term.
Need a more flexible AePS environment
While the Aadhaar Enabled Payment System (AePS) has emerged as the foundational technology enabling cash-in cash-out (CICO) across the country, efforts by bad actors to defraud banking customers through it continue to be a pressing concern
Our response to the RBI’s Draft framework for recognising Self-Regulatory Organisations (SRO) for FinTech Sector
Our response covers two themes:
Leading from a customer protection perspective, our comments emphasise the need for the prospective SRO to have duties towards the customers, at par with responsibilities towards the regulator.
Our Response to RBI’s Draft Omnibus Framework for recognising Self-Regulatory Organisations (SROs) for Regulated Entities (REs)
In this blogpost, we present our comments primarily to the former, but significantly implicating the latter. We include both frameworks since they cover similar subject matter – the creation of an SRO.
Moving towards harmonisation in financial regulation: Let’s start with capital
Higher capital adequacy norms locking up funds
Let’s not conflate microfinance with self-help-group financing
The microfinance industry has witnessed moves by the Reserve Bank of India (RBI) to revise the regulatory framework (March 2022) for it and also caution it against an exclusive focus on business growth (November 2022).
RBI’s ‘Financial Stability Reports’ and Stress Testing Methodologies
Analysing the contents of the Reserve Bank of India’s biannual FSRs and the methodology of the RBI’s supervisory stress tests reveals that there is scope for improvement, specifically regarding the continuity in the tracking of certain risk drivers, the extent of commentary on the information, and aspects of stress tests.
Financial Services Can Be More Humane
Tremendous efforts have gone into creating new authoritiessuch as the Central Consumer Protection Authority.
Approaches to Assessing Household Income for Microfinance Clients
The Microfinance sector is gearing up for change as the recent RBI (Regulatory
Framework for Microfinance Loans) Directions, 2022 has put in place comprehensive
regulations to ensure customer protection
Note on RBI’s Prompt Corrective Action Framework for Non-Banking Financial Companies
In this note, we discuss how the current approach of the PCA framework is inconsistent with the objectives it seeks to achieve.
