Nevertheless, the roll out of the new regulatory regime has run into some bottlenecks. Some MFIs are unable to comply with the qualifying asset criterion for registering as a NBFC-MFI, and therefore banks are reluctant to make fresh loans to them as such loans do not qualify as priority sector lending.
Small MFIs are also not able to meet the ₹ million entry point capital to be eligible to register as NBFC-MFI. In particular, the Andhra Pradesh based MFIs, saddled with huge losses, large NPAs and eroded capital, are facing an especially acute problem in complying with the capital and provisioning norms.