loader2
Login Open ICICI 3-in-1 Account
Text Size
Text to Speech
Color Contrast
Pause Animations

Open ICICI
3-in-1 Account

Manage your Savings, Demat and Trading Account conveniently at one place

+91

BLOG

Bihar government announces restriction on MFI – could impact on valuation in near term

ICICIdirect Research 27 Feb 2026 DISCLAIMER

The Bihar government introduced “The Bihar Micro Finance Institutions (Regulation of Money Lending and Prevention of Coercive Actions) Bill, 2026” mandating state registration of MFIs, permission before disbursement, capping total interest at 100% of principal to curb usurious lending, and restricting every borrower exposure to not more than two MFIs, materially tightening operating norms in the state.

MFIN, SRO of RBI-regulated entities (NBFC-MFIs, Banks, SFBs, NBFCs), stated the Bill is not applicable to RBI-regulated MFIs under Section 2(2) and such entities need not register at state level, but remain subject to borrower protection and non-coercive recovery provisions introduced in the bill.
Sector is witnessing recovery post prolonged stress cycle with stabilizing collections and recovery in disbursements, as the post-Jan’25 book (now ~50–75% of AUM) demonstrates strong X-bucket CE of ~99–99.8%. Thus, introduction of microfinance bill is seen to have moderate impact given healthy CE, though growth in the state is expected to witness moderation which partially could be offset by geographic diversification.

Among NBFC-MFIs, Fusion Microfinance has relatively high exposure to the state, while Utkarsh SFB, among SFBs, is having higher proportion of loans in Bihar.

 

Download ICICI Direct app

Invest, Track, and Manage your Portfolio Anytime, Anywhere

Download ICICI Direct app

Invest, Track, and Manage your Portfolio Anytime, Anywhere