Bengaluru: The Reserve Bank of India (RBI) has issued a circular dated June 6, 2025, revising the Qualifying Assets (QA) criteria for Non-Banking Financial Companies – Microfinance Institutions (NBFC-MFIs), reducing the requirement from “75% of total assets” to “a minimum of 60% of total assets (net of intangible assets)”. This significant policy update is expected to ease compliance challenges and enable NBFC-MFIs to serve microfinance clients more effectively while managing portfolio risks better.
The QA norm was originally introduced in 2011 when the RBI created the NBFC-MFI category, setting the QA threshold at “Not less than 85% of its net assets” wherein “Net assets” meant total assets other than cash and bank balances and money market instruments. In March 2022, the RBI revised this definition to 75% of total assets, aiming to provide flexibility and promote innovation in serving the evolving credit needs of microfinance clients. However, the change unintentionally resulted in a stricter framework, leading to frequent breaches of the norm.
