Microfinance body MFIN tightens underwriting guidelines for members

The microfinance industry's self-regulatory body MFIN on Tuesday announced that it has tightened loan underwriting guidelines for its members amid concerns about over-indebtedness among the borrowers.

Micro Finance Industry Network (MFIN) said the revised guidelines take care of current challenges in lending, wherein a lender does not get data on monthly outflows from a household on account of previous loans or even the 'bullet repayments' wherein money is paid at the end of a loan period.

Microlenders are carrying out varying practices at present, and hence, MFIN has issued the guidelines to ensure "uniformity in the treatment", and help lenders to have a robust underwriting policy dealing with cases of bullet repayments/missing EMIs.

The body, however, did not elaborate on the exact steps undertaken.

It can be noted that there have been concerns around over-indebtedness among MFI borrowers, wherein a single borrower has been given over five loans in many cases.

Some of the indus