Sa-Dhan backs continued microfinance guardrails, suggests RBI steering panel

Kolkata: Sa-Dhan, one of the self regulators (SRO) for the microfinance industry, on Friday suggested continuation of the lending guardrails adopted by lenders to the bottom of the pyramid customers even as the industry has shown signs of improvement.

The issue was discussed at a microfinance conclave organised by Sa-Dhan in Mumbai.

Microfinance guardrails in India, enforced by SROs like Microfinance Industry Network and Sa-Dhan, were implemented to ensure responsible lending and curb borrowers' over-indebtedness, which was the primary reason behind the severe stress that the sector has been passing through over the past two years.



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The key measures include limiting lenders to three per borrower, capping total indebtedness at Rs 2 lakh, and restricting loans to customers with existing, significant delinquencies.

“The microfinance sector has shown resilience over the years, but

it must continue to evolve with changing realities. By focusing on governance,

transparency, and customer well-being, these guardrails will help build greater trust and long-term sustainability in the sector,” Sa-Dhan chairman K Paul Thomas said.

At the conclave, Reserve Bank of India's central board member Satish Marathe is said to have suggested setting up a steering committee to address the issues faced by the microfinance sector.


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Marathe suggested that the RBI should consider constituting a steering committee for micro-finance; so as to have regular interactions between the two and sort out any issues being faced, according to a press statement by Sa-Dhan, one of the self-regulators for the microfinance industry.

“NITI Aayog has a major role in formulating the policies in the country and having a closer liaison with it will help the microfinance sector to grow,” he said.