Reserve Bank of India (Non-Banking Financial Companies – Microfinance Institution) Directions, 2025
UR
- Applies toFinance companies
- StatusIn force
- ImportanceMUST READ
- IssuedNov 28, 2025
- Amendmentsnone tracked
- Length29 points in 5 sections · 3 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out.
- Starts to applyNot statedNot stated separately in this document. Read the rule itself before you assume a start date.
- Time to get readyNot statedCannot be worked out until the day it starts to apply is known.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Numbers to remember
| 60 percent | A microfinance lender takes no deposits and keeps at least 60 percent of net assets in microfinance loans. RBI Para 8(3) |
| ₹100 crore | A not for profit lender with assets of ₹100 crore or more loses its exemption. RBI Para 14 |
| 15 per cent | Capital must stay at least 15 per cent of risk weighted assets, on and off the books. RBI Para 16 |
| 90 days | A loan overdue beyond 90 days becomes a non performing asset. RBI Para 24 |
| 1 percent | Total provisions never fall below 1 percent of the whole loan book. RBI Para 25(1) |
| 180 days | Or higher: half of instalments late 90 to 180 days, plus all instalments late 180 days or more. RBI Para 25(1) |
| 25 per cent | Any other finance company may keep microfinance loans only up to 25 per cent of assets. RBI Para 49 |
What it says
Chapter I. Preliminary
1. What such a lender is
A microfinance lender takes no deposits and keeps at least 60 percent of net assets in microfinance loans.
2. Who is covered
Every registered microfinance lending company must follow these directions.
3. In force on posting
These directions took effect the day they were placed on RBI's website.
4. Other rulebooks apply too
Other company rulebooks also apply, depending on the lender's size layer.
5. Adding, never replacing
These rules add to the other rulebooks; they never replace them.
Chapter II. Role of Board of Directors and Registration Requirements
1. Spread the lending map
The board sets internal limits so lending never piles up in one geography.
Chapter III. Qualifying Assets and Permissible Activities
Must know
1. Sixty percent, always
Qualifying microfinance assets must stay at least 60 percent of total assets at all times.
BankPulse example. A microfinance lender has total assets of 500 crore rupees, after removing intangible assets. Microfinance loans must be a minimum of 60 percent of that. That works out to 300 crore rupees, and the test applies at all times.
2. Charities above 100 crore
A not for profit lender with assets of ₹100 crore or more loses its exemption.
Do it
3. They must register
Such companies must register as microfinance lenders and follow all their rules.
Background
4. Four quarters, then explain
Falling short for four straight quarters means going to the Reserve Bank with a repair plan.
5. Scheme loans sit apart
Loans handled for government schemes sit in a separate segment, outside the qualifying test.
6. Scheme loans reported too
Even scheme loans go to credit information companies, so total borrower debt stays visible.
7. A roadmap with the form
Companies not yet compliant attach a board approved roadmap to their registration form.
Chapter IV. Prudential Regulations
Must know
1. Fifteen percent capital floor
Capital must stay at least 15 per cent of risk weighted assets, on and off the books.
2. Second grade capital capped
Second grade capital may never exceed the first grade amount.
3. Ninety days means bad
A loan overdue beyond 90 days becomes a non performing asset.
4. The provision floor
Total provisions never fall below 1 percent of the whole loan book.
5. Late loans cost more
Or higher: half of instalments late 90 to 180 days, plus all instalments late 180 days or more.
Background
6. Guaranteed part needs nothing
No provision is needed for the portion covered by the low income housing guarantee fund.
Chapter VII. Miscellaneous Instructions
Must know
1. A direct line to RBI
The body names a compliance officer who reports straight to the Reserve Bank.
2. Telling on members
The body must report member rule breaking to the Reserve Bank.
3. A cap for outsiders
Any other finance company may keep microfinance loans only up to 25 per cent of assets.
Do it
4. A third must be members
The body needs a third of all microfinance lenders as members when recognised.
5. Independent minds on board
A third of the body's board must be independent of member firms.
6. Lending banks check too
Banks that fund microfinance lenders must check the borrower runs by the rulebook.
Background
7. Join a watchdog body
Every microfinance lender joins at least one recognised self regulatory body and follows its code.
8. Compliance starts at home
The lender itself answers first for following every rule.
Chapter VIII. Repeal and Other Provisions
1. Old guidance repealed
All earlier microfinance company rules stand repealed from the day these directions arrived.
2. Old actions stay governed
Action already taken under the old rules stays governed by them.
Other RBI rules for NBFCs
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