Microfinance is turning into a double-edged sword as borrowers carrying multiple loans build up an estimated Rs 15,800 crore in debt. With repayments getting harder, these highly leveraged individuals often become ineligible for additional credit, tightening their cash flow and raising the odds of defaults across the microfinance sector.
The Reserve Bank of India has cautioned borrowers about misleading loan waiver campaigns that claim to wipe off debts to banks and NBFCs. The regulator says these offers are often fraudulent traps run by dishonest actors who profit through false promises and upfront fees. RBI urges people to stay alert and verify any waiver claims through official channels.
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The RBI has issued new guidelines allowing banks to provide relief to all borrowers in disaster-hit areas without waiting for requests. Effective from July 1, 2026, banks can extend existing measures, waive fees for up to a year, and keep services running via temporary premises and satellite offices. ATM restoration is also mandated promptly.
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