RBI asks NBFCs to charge interest rates based on preceding quarter

MUMBAI: Non-banking financial company micro financial institutions (NBFC-MFIs) shall ensure that the average interest rate on loans sanctioned during a quarter does not exceed the average borrowing cost during the preceding quarter plus the margin, RBI said today.

Earlier to this, the rate charged by NBFC-MFIs depended on average borrowing cost during a financial year plus margin.

The change has been taken as now the average base rate of banks is published on a quarterly basis, than earlier practice of yearly publication, RBI in a notification said.


The rates of interest charged by NBFCs are not regulated by the RBI.

However, in interest of customers, as per RBI regulations, the Board of NBFCs are required to lay out appropriate internal principles and procedures in determining interest rates and processing and other charges.

Complaints received against NBFCs generally pertain to charging of high interest/penal interest, according to RBI.