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NBFC-MFI Qualifying Assets Threshold Revised to 60%

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2025-26/44 · issued 06 Jun 2025 · ~2 min read

Quick answerRBI has revised the qualifying assets criterion for NBFC-MFIs: they must now hold at least 60% of net total assets (excluding intangibles) as microfinance loans, effective immediately. Failure for four consecutive quarters requires a remediation plan submission.

What changed

The qualifying assets definition for NBFC-MFIs is now aligned with the broader 'microfinance loans' definition from the Master Direction. The minimum threshold remains 60% of total assets (net of intangibles), but the compliance clock resets with this circular. Previously, the criterion was based on a different definition of qualifying assets.

What it means for you

NBFC-MFIs must ensure their microfinance loan portfolio consistently meets the 60% threshold on an ongoing basis. Falling short for four straight quarters triggers mandatory RBI engagement with a remediation plan. This tightens the link between asset classification and regulatory status, potentially impacting lending strategies and portfolio composition.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Review your current asset composition to confirm microfinance loans meet 60% of net total assets (excluding intangibles).
Monitor the qualifying assets ratio quarterly and set internal triggers to avoid four consecutive quarters of non-compliance.
Prepare a remediation plan template in case the threshold is breached for four quarters, detailing steps to restore compliance.
Update internal policies and reporting systems to align with the revised definition of qualifying assets as per microfinance loans.

Who it affects

All NBFC-MFIs registered with RBI, Compliance and risk management teams of NBFC-MFIs, Auditors and consultants advising NBFC-MFIs on regulatory adherence

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-06-18 01:53 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn 03 Aug 2026, 04:00 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the new qualifying assets threshold for NBFC-MFIs?

NBFC-MFIs must maintain qualifying assets (aligned with microfinance loans definition) at a minimum of 60% of total assets, net of intangible assets, on an ongoing basis.

What happens if an NBFC-MFI fails to meet the 60% threshold for four consecutive quarters?

The NBFC-MFI must approach the Reserve Bank with a remediation plan outlining steps to rectify the shortfall, and RBI will take a view on the matter.

When does this revised criterion take effect?

The revised provisions are effective from the date of the circular, i.e., June 06, 2025.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)

Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)

RBI’s words: “Official withdrawal register entry #41: DoR.FIN.REC.25/03.10.038/2025-26 — "Review of Qualifying Assets Criteria" dated June 6, 2025”

📜 Read the original circular — full text as issued by RBI

RBI/2025-26/44
 DoR.FIN.REC.25/03.10.038/2025-26
 June 06, 2025
 All Non-Banking Financial Companies - Microfinance Institutions
 Dear Sir/ Madam,
 Review of Qualifying Assets Criteria
 Please refer to paragraph 8.1 of the Master Direction - Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022 dated March 14, 2022 which prescribes Qualifying Assets Criteria for Non-Banking Financial Companies - Microfinance Institutions. On a review, it has been decided to revise the qualifying asset criteria and the amended paragraph 8.1 of the Master Direction may be read as follows.
 Paragraph 8.1: The definition of ‘qualifying assets’ of NBFC-MFIs has been aligned with the definition of ‘microfinance loans’ given at paragraph 3 above. Qualifying assets of NBFC-MFIs shall constitute a minimum of 60 percent of the total assets (netted off by intangible assets), on an ongoing basis. If an NBFC-MFI fails to maintain the qualifying assets as aforesaid for four consecutive quarters, it shall approach the Reserve Bank with a remediation plan for taking a view in the matter. 
 2. This circular is issued in exercise of the powers conferred by Chapter IIIB of the Reserve Bank of India Act, 1934. The revised provisions shall come into effect from the date of this circular.
 3. Master Direction - Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022 is being updated accordingly.
 Yours faithfully,
 (J.P. Sharma)
 Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2025-26/44 · issued 06 Jun 2025. The plain-English explanation above is BankPulse’s own independent summary.

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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12856&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.