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Why is RBI concerned over microfinance credit growth in UP and Bihar?
Jul 11, 2024
The podcast discusses RBI's worries about microfinance credit growth in Uttar Pradesh and Bihar, highlighting the challenges faced in Andhra Pradesh, regulatory measures by RBI, and the history of microfinance in India.
06:59
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Quick takeaways
- RBI monitors microfinance growth in UP and Bihar to prevent over-lending risks.
- Historical evolution of microfinance in India highlights regulatory interventions to safeguard borrowers' interests.
Deep dives
RBI's Concerns on Microfinance Spread in UP and Bihar
The RBI has advised microfinance lenders to reduce loan approvals in Uttar Pradesh and Bihar due to the rapid growth of microfinance institutions in these states. These institutions offer collateral-free loans to low-income individuals, aiding businesses like Rupa's vegetable vendor venture. Despite boosting local economies with increased lending, concerns arise regarding the potential risks of over-lending and borrower vulnerability, similar to the Andhra Pradesh crisis. The RBI aims to prevent a similar situation by monitoring lending activities closely and strengthening regulatory frameworks.
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