Bank credit to Micro Finance Institutions (MFI) is likely to decline by 50 per cent in the third quarter of the current fiscal, an official said on Tuesday.
Bank finance typically accounts for 50-70 per cent of MFI credit.
"Since September, bank finance has dried up. We estimate that on an average, there is a decline of 50 per cent to the MFI sector in West Bengal," Association of Microfinance Institutions-West Bengal Chairman A K Maity said.
He was speaking at a programme to announce the 4th Eastern India Microfinance Summit 2018 on December 14.
However, association secretary and Uttarayan MFI MD, Kartick Biswas said impact of liquidity crisis is not across the board, and banks are extending credit based on individual balance sheet.
The outstanding loan book of 36 MFIs under the association is Rs 27,000 crore.
Biswas said most of MFI growth takes place in the fourth quarter and he expects the liquidity situation to ease in the January-March quarter.
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