Liquidity push: RBI relaxes rules for MFIs

The Reserve Bank of India (RBI) on Wednesday eased debt restructuring norms for the microfinance sector. The move aims at helping banks provide liquidity support to crisis-ridden micro finance institutions (MFIs).

The Reserve Bank of India (RBI) on Wednesday eased debt restructuring norms for the microfinance sector. The move aims at helping banks provide liquidity support to crisis-ridden micro finance institutions (MFIs).

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The RBI said it would facilitate operations till the Malegam Committee submitted its report.

Under the new norms, which will remain effective till March 31, 2011, banks would be allowed to treat advances to MFIs as good assets even if such loans are not fully secured. The decision would allow banks to restructure loans provided to MFIs without much difficulty, the RBI said in a statement.