Microfinance institutions must adhere to RBI guidelines: Udupi DC

Udupi: Microfinance institutions, lenders, and other financial entities operating in the district must strictly follow the guidelines and regulations issued by the Reserve Bank of India (RBI), said deputy commissioner Vidya Kumari K.Chairing a meeting regarding the regulation of microfinance institutions on Thursday, she said, that cases of harassment of loan recipients by microfinance institutions were reported in the media across the state recently. This appears to be due to a failure to adhere to the guidelines and regulations, she noted.She stated that microfinance institutions should assess the family income and other aspects of the borrowers before granting loans and should provide loans that do not exceed 50% of their income. However, it seems that loans are being granted without considering the borrowers' repayment capacity, which should not be allowed. Both lenders and borrowers must maintain financial discipline, she added.According to RBI guidelines, microfinance institutions are permitted to lend only up to Rs 3 lakh. Legal actions must be taken for loan repayment, and if anyone violates the law by resorting to violence, using abusive language, extortion, or harassment, police can register a suo-motu case, she warned.She mentioned that complaints of harassment by microfinance institutions could be submitted by the public at the DC's office during office hours, or through the control room at phone No. 0820-2574802.SP Arun K said that finance companies must not visit borrowers' homes before 9am or after 6pm for loan collection. Any form of harassment will not be tolerated, and strict legal action will be taken against those violating the law, he added.Assistant commissioner Maheshchandra, Lead Bank Manager Harish, various district officials, tahsildars, representatives of different microfinance institutions, and others were present.