MFIN and Microfinance Institutions: Guardrails and Functions
Why in the news
Growth in micro-lending by NBFCs and fintechs, a space traditionally held by MFIs, is drawing regulatory attention.
About MFIN
- Microfinance Institutions Network: an SRO that links the industry with regulators such as the RBI.
- Promotes responsible lending, transparency and financial inclusion.
- Guardrails: maximum three lenders per borrower (from April 1, 2025) and monitoring of outstanding loans.
Functions
- Represents MFIs before regulators and policymakers.
- Sets a code of conduct, prudential norms and best practices, and checks compliance with RBI rules.
- Runs training and capacity building.
- Keeps a central database on lending and credit scores.
- Offers grievance redressal and dispute resolution.
Exam angle
- MFIN full form: Microfinance Institutions Network.
- Borrower cap: three lenders.
- Status: self-regulatory organisation.