The Reserve Bank of India (RBI) on February 25, 2025, issued a notification regarding the Review of Risk Weights on Microfinance Loans.
The following has been stated: -
•Microfinance loans like consumer credit will now attract a 100% risk weight, excluding them from higher risk weights on consumer credit. Loans not considered consumer credit and meet specified criteria may be classified under the Retail Regulatory Portfolio (RRP) with a 75% risk weight. For Regional Rural Banks (RRBs) and Local Area Banks (LABs), all microfinance loans will have a 100% risk weight.
•These changes apply to both new and outstanding microfinance loans.
The detailed notification is given in the document below.
[Notification No. RBI/2024-25/119 DOR.CRE.REC.63/21.06.001/2024-25]
