The ongoing issue of microfinance lending between government, microfinance institutions (MFIs) and Reserve Bank of India (RBI) regarding regulations to be set on them has cautioned commercial banks too. These banks are now entering into contracts with MFIs to ensure that no high rate of interest is charged to customers.

The clientele' of MFIs is mostly the rural base, farmers, womenfolk and daily wage earners. The issue arose when MFIs in Andhra Pradesh were found to be charging enormous high rates of interest to poor customers and were adhering to harsh loan recovery norms, causing many customers to even commit suicide.

To look into the issue, the RBI has set up a special committee, the Malegam committee to review the case and present its recommendations.