Mumbai: Reserve Bank of India’s (RBI) Advisory Paper on Harmonizing Regulations for Microfinance Lenders allays concerns of Bandhan Bank, being subject to maximum number of lenders or a lending rate cap and is therefore favorable, ICICI Securities said in a report.
Second, he said the Assam government’s decision to provide aid as well as an incentive for microcredit would partly address one of the main concerns of its high stress pool in the state.
The private sector lender Bandhan Bank, with the highest market share in Assam of over 55% and a ₹An exposure of 7,000 crore, naturally, should benefit from the program designed to maintain the credit culture and promote responsible repayment behavior, according to the report.
“However, it is difficult to quantify the magnitude of the impact because the debt of borrowers does not exceed ₹125,000 are eligible and Bandhan is actively switching a borrower from MFIs to individual loans, ”ICICI Securities said in a June 20 report.
The Assam government remains true to its election promise and has announced its decision to provide relief as well as incentives for loans to MFIs. Assam, in particular, has witnessed a huge build-up of stress for the entire MFI sector.
The report said the proposed ad is a win-win for lenders as well as borrowers. The nuances and conditionalities attached will help maintain the credit culture and promote responsible lending, borrowing and repayment behavior.
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