The number of micro finance companies is increasing rapidly in the country. Micro finance companies and non-banking financial institutions issue small loans ranging from 10 thousand to 50 thousand. RBI asked non-banking financial institutions to slow down the pace of disbursing loans.
RBI Warning: The Reserve Bank of India (RBI) says that the risk of small loans getting defaulted has increased in Bihar and Uttar Pradesh. Such loans are issued without any guarantee and without any income. The biggest risk in this is that in the absence of guarantee, the bank cannot directly recover any money from the borrower.
Microfinance companies and non-banking financial institutions issue small loans ranging from 10 thousand to 50 thousand. Every company and bank has different rules regarding this. Some institutions also give loans of more than 50 thousand rupees. There is always a risk in such loans issued without guarantee.
A similar situation arose in Andhra Pradesh in the year 2010, when banks and non-banking institutions distributed small loans to people. After this, a large number of people got into debt, so the state government banned loan recovery. People were demanding relief from the government in this matter. For this, the state government brought a law in 2010, which banned the recovery of small loans. Due to this, banks and non-banking companies had to suffer huge losses. Now the same situation is visible in both the states.
The number of companies giving loans is increasing continuously in Bihar
The number of micro finance companies in the country is increasing rapidly. Especially in Bihar, their number has increased rapidly since the year 2019. In the year 2019, 20 to 25 companies were engaged in giving loans, but now their number has crossed 40. The situation in Bihar is more serious than in UP.
These companies are worried about Bihar, but now RBI has also warned that if there is no reduction in the issuance of loans, then the money can be lost. In this matter, there have been continuous meetings of the officials of micro finance companies in the last few months, in which concern was expressed about the repayment of the loan after taking it.
Situation in Bihar
10.1 percent people took loan from three places
8.7 percent people took loan from four or more places
Situation in UP
7.7 percent people took loan from three places
6.6 percent people took loan from four or more places
National average
8.7 percent people took loan from three places
6.4 percent people took loan from four or more places
Loan recovery will have to be increased
According to banking expert Ashwani Rana, non-banking institutions distribute small loans without guarantee. This increases the risk of loan default. Especially when a person takes loan from many places simultaneously. If he is not able to repay the loan from one place, then the possibility of repaying from other place also reduces. Now banks and non-banking institutions will have to work on reducing loan issuance and recovery in Bihar and UP.
