Bandhan Bank was soaring on Tuesday after the Reserve Bank of India (RBI) announced a regime change for microfinance loans. It is being called as a ‘regime change’, because it has freed lenders and borrowers.

The rules have removed all limits on interest rates that can be charged on microfinance loans; also households with income upto Rs 3 lakh will qualify for MFI loans versus Rs 2 lakh earlier.

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But much more important while the earlier rules applied only to microfinance non-banking financial companies (NBFCs), the new rules apply to banks, co-operatives NBFCs, indeed everyone. So the activity is regulated and not the entity.

So what does it mean for the listed companies and for the borrowers? Alok Misra CEO of Microfinance Institutions Network (MFIN) and Udaya Kumar Hebbar, CEO of CreditAccess Grameen discussed this further.

“It is a very welcome move, it will expand the horizon of the financial inclusion much further and it would also spur innovation,” said Misra.

According to Hebbar, the new MFI policy will provide a breather to the industry.

For the entire discussion, watch the accompanying video

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