Hyderabad, Nov. 16: Banks in the state which have lent huge sums to microfinance institutions (MFIs), have approached the state government for help, given the poor recovery by the MFIs over the last few weeks.
A top government official said on Tuesday that Andhra Bank has expressed concern over the poor recovery situation by MFIs, which the bank feels may eventually affect itself as it has lent funds to MFIs.
“A senior board member of Andhra Bank recently met the chief secretary of the state government and requested for help in recovering the loans for MFIs. However, he was firmly told that the state cannot interfere in the matter,” the official told PTI.
Andhra Bank had till recently maintained that it had an exposure of `300 crore towards micro-finance sector and that it was not worried over its exposure to MFIs in the State, where the state government had issued an ordinance to regulate the activities of MFIs including loan recovery methods.
“We consider MFIs as like any of our other corporate borrower. We don’t see any potential threat as of now,” Andhra Bank chairman and managing director, Mr R. Ramachandran, had said during results meet.
However, the situation now appears to have become grim to the lenders to MFIs.
The government though did not assure anything to the bank on recoveries, it did inform that the government would make sure that situation to conduct micro finance business in rural areas would be smooth, the official added.