MFIs seek RBI nod to raise borrower household-income cap to ₹4.5 lakh
Industry body Sa-Dhan plans to seek an increase in the microfinance borrower household-income eligibility threshold from ₹3 lakh to ₹4.5 lakh. The push comes as MFI portfolios fell 7.6% year on year to ₹3.26 trillion in Q1FY27, with severe delinquencies still elevated.
What happened
Sa-Dhan · Indian MFIs plan to seek an RBI increase in the borrower household-income threshold to Rs 450,000. The sector is also concerned about upcoming UPI MDR
Key facts
- Proposed household-income eligibility threshold: Rs 450,000 per annum, up from Rs 300,000
- UPI MDR: 0.4% on person-to-merchant transactions above Rs 2,000 from October 15, 2026
- Q1FY27 MFI portfolio: Rs 3.26 trillion, down 7.6% YoY
- Average fresh-loan ticket size: Rs 62,962, up 15%
- MFI funding: Rs 17,706 crore
What changed
Indian MFIs plan to seek an RBI increase in the borrower household-income threshold to Rs 450,000. The sector is also concerned about upcoming UPI MDR charges, while portfolio outstanding contracted despite improving early-stage asset quality and funding support.
Why this matters
A higher income cap could expand the eligible borrower pool, but MFIs will need tighter underwriting and collections discipline while severe delinquencies remain elevated.
What to watch
- RBI commentary or circulars on revising microfinance household-income eligibility criteria.
- Quarterly MFI portfolio growth, PAR 30+/PAR 90+ and write-off trends, especially in stressed states.
- Evidence that household leverage and multiple-borrowing rates are declining after industry underwriting restrictions.
- Changes in funding costs, bank lending appetite and securitization/assignment volumes for MFIs.
- Whether any approval includes a phased rollout, borrower-level indebtedness caps, mandatory bureau verification or differentiated rules by lender type.