Banks put on hold disbursements and sanctions to Microfinance Companies

Credit Pipeline goes dry overnight for many MFI’s who have exposure to the microfinance market in Andhra Pradesh.

Early reports indicate that many public and private sector banks who have given loans to Microfinance Institutions have halted disbursements of previously sanctioned and approved loans.These Banks are waiting to see how the microfinance crisis in Andhra Pradesh will pan out in the coming days before taking a final decision.

According to industry sources, banks have already delayed the disbursal of around Rs 200 crore to more than forty MFI’s this week citing the delays in recovery of micro loans given to MFI customers in Andhra Pradesh.bank loan MFI

The recently passed microfinance ordinance has barred microfinance companies from lending or recovering their dues until they are registered with District Rural Development Authority. But the High court today allowed Microfinance companies to collect repayments.

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