Question
From the following information, calculate the maximum rate of interest that a NBFC-MFI can charge on loans given by the institution. (a) The loan is
From the following information, calculate the maximum rate of interest that a NBFC-MFI can
charge on loans given by the institution.
(a) The loan is being given in September, 2020
(b) The average base rate of 5 largest commercial banks announced by RBI for the
quarter beginning 1st July, 2020 is 8.61%
(c) The cost of funds for the MFI is 12%
Your answer should be based on the RBI regulations for maximum interest rate that can be charged
by NBFC-MFIs on loans given by them. You need to explain the RBI regulations and show the
calculations. Stating only the maximum rate of interest is not enough. If any required information is
missing, make reasonable assumption about the missing information and proceed.
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