Letter to BS: Microfinance firms feel the ripple effect of liquidity crisis

The beneficiaries of microcredit are mostly from the unorganised sector and as such, their capacity to borrow from the organised financial market is near zero

=This refers to “Microfinance firms feel the ripple effect of liquidity crisis” (October 29). While microfinance institutions are engaged in driving the growth of the microeconomic activities, it is important to ensure that these organisations are facilitated with need-based credit at reasonable terms or else it will negatively impact the growth of small and micro businesses. The persistent liquidity crisis in the non-banking financial company (NBFC) segment is not conducive to micro-lenders. In order to tide over the present liquidity crisis, relaxations made by the Reserve Bank of India (RBI) will not deliver the intended results unless the banks have