What changed
RBI has issued the Reserve Bank of India (Non-Banking Financial Companies – Microfinance Institution) Directions, 2025, under sections 45JA, 45L, and 45M of the RBI Act, 1934, to regulate NBFC-MFIs and prevent affairs from being conducted in a manner detrimental to investors or prejudicial to NBFC-MFIs.
What it means for you
The directions apply to all NBFC-MFIs registered with RBI and require compliance with provisions on board roles, qualifying assets, prudential norms, shareholding, governance, risk management, and other instructions, in addition to existing scale-based regulations.
What you must do
- Review and strengthen governance and risk management practices
- Comply with prudential regulations and directions
- Ensure transparency and disclosure in financial dealings
- Implement robust internal controls and audit mechanisms
Who it affects
NBFC-MFIs
What are the key changes introduced by RBI for NBFC-MFIs?
RBI has introduced directions on governance, risk management, and prudential regulations for NBFC-MFIs to ensure stability in the financial system.
What is the purpose of RBI's directions for NBFC-MFIs?
The directions aim to prevent detrimental conduct of NBFC-MFIs and ensure that their affairs are conducted in a manner that is not detrimental to investors or prejudicial to the NBFC-MFIs themselves.
What are the key implications of RBI's directions for NBFC-MFIs?
The directions will impact NBFC-MFIs, requiring them to strengthen their governance and risk management practices, comply with prudential regulations and directions, ensure transparency and disclosure in financial dealings, and implement robust internal controls and audit mechanisms.