Mumbai: According to ICICI Securities, the impact of the Reserve Bank of India's new harmonisation rules for microfinance loans on small finance banks and banks will be neutral to positive, while non-banking financing companiesmicrofinance institutions like CreditAccess Grameen will benefit the most.

The RBI announced a regulatory framework for microfinance loans on Monday, which includes a standard definition of such loans across all regulated lenders, pricing criteria that are aligned, and the removal of the interest rate ceiling that microfinance lenders are required to charge. "The new regulatory environment would level the playing field for all incumbents," ICICI Securities said, "and the risk-based pricing methodology is anticipated to enable players to absorb cyclical lumpy loan costs more effectively than before."

In contrast to the current state of more stringent laws applying only to microfinance institutions, the regulations aim to unify all microfinance lenders under uniform regulatory standards.

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