Banks have urged the Reserve Bank of India (RBI) against withdrawing the priority sector status for loans extended to microfinance institutions (MFIs).
"Our main reservation is that nothing should happen which could result in the withdrawal of priority sector status," said K Ramakrishnan, chief executive officer of the Indian Banks' Association (IBA).
"Banks will always analyse, assess and conduct the required due diligence before giving loans to MFIs. However, if the latter don't follow the regulations, banks should not be penalised. This was the main concern raised in today's meeting," he added.
Top bank officials met RBI deputy governor KC Chakrabarty on Thursday to give feedback on Malegam committee's recommendations on the
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