IDBI Bank to lend Rs 700 cr more to microfinance firms

IDBI Bank plans to lend Rs 700 crore more to microfinance companies by the end of this financial year, a top official said on Tuesday.

"We have exposure of about 800 crore, and we can take it to about 1,500 crore by the end of the fiscal," Executive Director RK Bansal said.

He said the Reserve Bank of India's (RBI) guidelines for the sector issued in May have brought about clarity and now "things are okay" in the sector.

The central bank had in May issued regulations for the microfinance sector and capped at 26% the interest rate that these firms can charge their customers.

The central government, which has been taking feedback from the RBI, banks and MFIs, is widely expected to table the draft MFI Bill in the monsoon session of parliament.

The country's MFI sector suffered a setback last year when Andhra Pradesh, the biggest market for MFIs in the country, approved legislation to regulate the industry following complaints about high interest rates, aggressive recovery practices and overextended borrowers.

Source: Business Standard