High rates, debt trap & suicides: RBI issues stark microfinance warning

In the financial heart of Mumbai, the Reserve Bank of India (RBI) issued an unusually sharp rebuke to the

microfinance

industry. Rajeshwar Rao, a deputy governor of RBI, decried the “excessive” interest rates and margins charged by lenders — even those flush with low-cost capital.
His speech at a recent summit on financial inclusion was not just rhetoric; it was a shot across the bow of an industry long celebrated as a tool for poverty alleviation but increasingly seen as a source of financial distress.