“Mentor’s Comments”
- https://www.financialexpress.
com/opinion/microfinance-2-0- to-make-microfinance- regulation-better/2295124/ - In the intro, mention the issue of different regulatory frameworks for NBFC-MFI and other lenders.
- In the body, mention the recently released document by the RBI which seeks to make the level playing field for all the lenders through uniform regulations by removing limit of a maximum of two entities serving the customer, freedom to price the loan etc. In the suggestion mention revising income levels to increase capital creation, need for loan cap, allowing the use of Aadhar KYC to NBFCs etc.
- Conclude by mentioning the RBI’s move will help the sector grow and contribute to the economy.
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Sehaj
You can start by very briefly writing about microfinance sector first- definition or its importance in rural economy. Also mention other organisations like universal banks, small payment banks etc coming in microfinance sector and benefiting due to different regulations.
Norms mentioned by RBI are fine. In second part on suggestions, you can add some points like maintaining total loan-cap as some institutions that can offer higher-ticket loans with varied tenure will gain unfair advantage, also there is risk of NPAs. Need of stronger governance is also felt. This can be done through empowering self-regulatory organisations. You can easily cover these aspects as your content seems less in this answer.
Conclusion is fine, keep practicing. 🙂
4.5/10
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Sumita
Introduction is fine. In newly introduced regulations I think you have mixed up the points- 50% cap on the Fixed Obligation to Income Ratio (FOIR) means overall indebtness at household level has been fixed, not interest rates.
On the contrary NBFC-MFIs have been given freedom to price loans(interest rates)adequately, duly approved by the board, by factoring in operating geography, customer behaviour, vintage etc
In the 3rd point mention that earlier there was a cap of 2 lenders per borrower which has been removed.
In suggestion points are fine, fixing inconsistency in credit bureau reporting and using Aadhar-KYC for onboarding customers and maintaining their details can be written in separate points.
Conclusion is fine, read some more about the topic, concept should be clear in such questions.
Keep practicing. 🙂
3.5/10