RBI Sets 60% Qualifying Asset Norm for NBFC-MFIs

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NBFC-MFI qualifying asset criteria

Circular No. RBI/2025-26/44 DoR.FIN.REC.25/03.10.038/2025-26, Dated 06.06.2025

The Reserve Bank of India (RBI) has amended the qualifying asset requirement under Paragraph 8.1 of the Master Directions for NBFC-Microfinance Institutions (NBFC-MFIs). This revision is aimed at reinforcing the core operational focus of such institutions on microfinance activities.

1. Minimum Qualifying Asset Threshold Set at 60%

Under the revised norms, NBFC-MFIs are now required to ensure that at least 60% of their total assets (excluding intangible assets) constitute qualifying assets on an ongoing basis. This change ensures that a substantial portion of the institution’s portfolio remains aligned with microfinance objectives.

2. Consequence of Non-Compliance Over Four Quarters

In the event that an NBFC-MFI fails to maintain the 60% qualifying asset threshold for four consecutive quarters, it is mandatorily required to approach the RBI. The institution must submit a remediation plan, based on which the RBI will review the situation and take an appropriate view.

3. Objective of the Amendment

This regulatory update is designed to ensure that NBFC-MFIs remain committed to serving low-income and financially excluded segments of the population. By imposing a stringent asset composition norm, the RBI aims to preserve the microfinance identity and promote disciplined lending practices in the sector.

Click Here To Read The Full Circular

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied