Money & Banking

Demonetisation halts disbursements by MFIs

PTI Kolkata | Updated on January 15, 2018 Published on November 18, 2016

Demonetisation of old high value currency notes has brought disbursements by micro-finance institutions (MFIs) virtually to a standstill.

MFIs like Bandhan Bank and Village Financial Services are not being able to make any disbursements to self-help groups (SHGs) since November 9.

“Since small notes are not available, we are not being able to make any disbursements to SHGs,” MD of Bandhan Bank, C S Ghosh, told PTI on the sidelines of a seminar on MFIs here today.

Bandhan Bank, formerly Bandhan Financial Services, is also into MFI lending, besides extending normal banking credit.

Ghosh said while the repayment by MFIs are on, disbursals have stopped.

“This is a temporary problem. Things will become easier once the new Rs 500 currency notes are pumped into the system,” he said, adding that “the entire MFI segment is facing this problem’’.

Village Financial Services chairman Ajit Maity said: “Disbursements have been put on hold since November 9.

Although it is creating some problem among SHGs, this is temporary in nature.”

“This is expected to continue for some more time,” Maity added.

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Published on November 18, 2016
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