In a step to curb the tendency of the microfinance firms of lending loans at a very high rate of interest, the Central bank has tried to question their funding. The Reserve Bank of India (RBI) has raised questions on the banks that lend these kind of institutions.

The for-profit organizations the forward these with a higher rate, in the way earning profits.

The question was raised by the Chairman. The views were revealed at a meeting that took place chaired by RBI deputy governor Usha Thorat with the chairmen of banks. The first of such string of meetings was presided over by deputy governor KC Chakrabarty.

The meetings are taking place to review the portfolio of members for financial inclusion.

The fact is that the for-profit microfinance institutions are lending money at a rate which is as high as 13 per cent, in the way killing the whole idea behind this kind of financing.

Microfinance is made mostly for the poor strata and is done with the idea of providing cheaper as well as small amounts of loans.

This happened just day after SKS Microfinance's IPO was oversubscribed 13 times.