Who issued guidelines for the microfinance institutions in India?

Correct option is D

The correct answer is (d) Reserve Bank of India.
· Reserve Bank of India (RBI) is the regulatory authority responsible for issuing guidelines for microfinance institutions (MFIs) in India, aimed at promoting fair practices, safeguarding borrower interests, and ensuring sectoral growth.
Key Points:
· The Reserve Bank of India oversees and regulates NBFC-MFIs, which are microfinance institutions registered as Non-Banking Financial Companies.
· Guidelines issued by RBI include interest rate caps, loan eligibility criteria, and rules against coercive recovery practices.
· The RBI’s framework aims to provide low-income groups with greater access to financial services in a sustainable manner.
Information Booster:
· Microfinance Institutions (MFIs) provide financial services to low-income individuals who lack access to traditional banking services.
· NABARD’s Role: NABARD also supports MFIs through refinancing and developmental programs, but it does not regulate them.
· RBI Regulations: Key guidelines from RBI cover aspects such as pricing transparency, fair lending practices, and credit bureau reporting to ensure responsible lending in the microfinance sector.
· Microfinance Objectives: MFIs play a crucial role in financial inclusion, empowering rural populations, especially women, by providing small loans for entrepreneurship and personal needs.