RBI lowers qualifying asset threshold for NBFC-MFIs to 60%, enabling greater diversification

Industry leaders, including CreditAccess Grameen CEO Ganesh Narayanan, welcomed the move as a transformative step that will enhance balance sheet stability and earnings potential.
| Photo Credit:
Naturecreator

The RBI has reduced the qualifying asset threshold to 60% (net of intangible assets) from 75% of total assets for NBFC-MFIs (non-banking finance company – microfinance institutions), allowing them to diversify their asset base.

The qualifying assets of NBFC-MFIs should constitute a minimum of 60 per cent of the total assets (netted off by intangible assets), on an ongoing basis.

If an NBFC-MFI fails to maintain the qualifying assets for four consecutive quarters, it should approach the Reserve Bank with a remediation plan for taking a view in the matter.

The definition of qualifying asset is aligned with the definition of ‘microfinance loans’. A microfinance loan is defined as a collateral-free loan given to a household having annual household income up to ₹3 lakh. For this purpose, the household means an individual family unit, i.e., husband, wife and their unmarried children.

Ganesh Narayanan, Chief Executive Officer, CreditAccess Grameen Ltd., said the reduction in the qualifying asset threshold is a transformative step forward.

“This policy shift will enable accelerated diversification within our operations, ensuring balance sheet stability and positioning us for robust cross-cycle earnings,” Narayanan said.

Published on June 6, 2025