RBI Revises Qualifying Asset Criteria for NBFC-MFIs to Ensure 60% Microfinance Loan Composition

Revised Qualifying Assets Definition:

• The definition of "qualifying assets" for NBFC-MFIs has been aligned with the definition of ‘microfinance loans’.
• At least 60% of the total assets (excluding intangible assets) must be qualifying assets on an ongoing basis.

It has been decided to revise the qualifying asset criteria, and the amended paragraph 8.1 of the Master Direction may be read as follows.

Paragraph 8.1: The definition of ‘qualifying assets’ of NBFC-MFIs has been aligned with the definition of ‘microfinance loans’ given at paragraph 3 above. Qualifying assets of NBFC-MFIs shall constitute a minimum of 60 percent of the total assets (netted off by intangible assets), on an ongoing basis. If an NBFC-MFI fails to maintain the qualifying assets as aforesaid for four consecutive quarters, it shall approach the Reserve Bank with a remediation plan for taking a view in the matter.

If an NBFC-MFI fails to maintain this 60% threshold for four consecutive quarters, it must submit a remediation plan to the RBI for further action.

These revised provisions are effective from the date of the circular (i.e., June 6, 2025).

The directive, issued under the powers granted by Chapter IIIB of the Reserve Bank of India Act, 1934, comes into immediate effect. RBI also noted that the relevant Master Direction from 2022 would be updated to incorporate these changes.