In India, microfinance activities are primarily governed by the following laws and regulations

Reserve Bank of India (RBI) Act, 1934: The RBI Act empowers the Reserve Bank of India, the country's central bank, to regulate and supervise the functioning of banks and financial institutions, including microfinance institutions.


Companies Act, 2013: MFIs operating as non-banking financial companies (NBFCs) are governed by the Companies Act. This legislation provides guidelines for the incorporation, governance, and financial reporting of companies, including NBFCs engaged in microfinance activities.


Microfinance Institutions (Development and Regulation) Bill, 2012: This bill, which is yet to be passed by the Parliament, aims to establish a regulatory framework specific to microfinance institutions in India. It seeks to regulate the registration, governance, operations, and funding of MFIs to ensure consumer protection and responsible lending practices.


Non-Banking Financial Companies (NBFC) Regulations: NBFCs engaged in microfinance activities are regulated by the RBI under the NBFC regulations. These regulations outline the requirements for registration, capital adequacy, lending norms, governance, and reporting obligations for microfinance NBFCs.


Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002: This act enables banks and financial institutions, including microfinance lenders, to take recourse to the securitization and asset reconstruction process in cases of loan defaults. It provides a legal framework for the enforcement of security interests and recovery of dues.


Credit Information Companies (Regulation) Act, 2005: This legislation governs credit information bureaus in India. MFIs are required to report borrower information to credit bureaus, and the act establishes the framework for the functioning, regulation, and sharing of credit information by these bureaus.


Prevention of Money Laundering Act, 2002 (PMLA): MFIs, like other financial institutions, are obligated to comply with anti-money laundering and counter-terrorist financing regulations. The PMLA imposes obligations related to customer due diligence, record-keeping, reporting of suspicious transactions, and maintaining an internal system for compliance.

It's important to note that regulatory requirements and guidelines may evolve over time, and it's advisable to consult the latest legislation, circulars, and notifications issued by the RBI and other relevant authorities to ensure compliance with the current regulatory framework for microfinance activities in India.