Categorised under 3 heads, these guidelines aim to address the issue of pricing, over indebtedness and discipline.

Key features 

• Pricing of Loans: MFIs to follow transparent pricing policies with the rate of interest justifiable and approved by Board Members. 
• Over indebtedness: Number of lenders for MF loans shall not exceed 3 from all types of lenders. 
• Code of Conduct and Discipline:  No fresh loan to any client who is in default for more than 60 days with any lender. 

About Microfinance (Microcredit)

• Meaning: It refers to the provision of small credit to the low-income individuals/groups having no other access to financial services. 
  • MFIs offer multiple services like savings accounts, fund transfers, micro insurance, and microcredit and earn interest on credit. 
• Origin: The idea originated with the creation of Grameen Bank (1983), offering small loans to entrepreneurs, by the Bangladeshi social entrepreneur Muhammad Yunus.

Key Initiatives for regulation of MFIs in India

• Self-Regulatory Organizations (SROs): Microfinance Institutions Network (MFIN) and Sa-Dhan were recognized as SRO by RBI in 2014.
• Regulatory Framework for Microfinance Loans (2022): By RBI deals with definition of microfinance loans, repayment limits, etc.