Indian MFI group to refuse loans to defaulters of any member firm
A lobby group of microlenders on Tuesday decided to disallow loans for new applicants who have previously defaulted on repaying any other lender.
The Microfinance Institutions Network (MFIN) made the decision at a closed-door meeting held on Tuesday in Mumbai.
“The MFIs mutually agreed that post the demonetisation phase, the cut-off date for which is yet to be agreed to, MFIs would not lend to a new customer who is delinquent with any other lender. This disrupts credit discipline and encourages delinquency,” said Ratna Vishwanathan, chief executive officer of MFIN.
The move comes as collection rates have fallen at microfinance institutions (MFIs) and some rating agencies have changed their outlooks.