Chennai, India, March, 10 2011 - Banks have prepared a blueprint for restructuring loans to microfinance institutions (MFIs).

According to the proposal, institutions like SKS Microfinance, Spandana Spoorthy, Asmita, Basixs and Share Micro Finance would be given a maximum of 10 years to repay the loans at an interest rate of 12%. These microfinance lenders were originally sanctioned loans at interest rates between 10% and 15%.

MFIs are in the throes of change wherein lending activities have come to a standstill in several parts of the country. The crisis set in after the the Andhra Pradesh government imposed tight restrictions on MFIs.

Andhra Pradesh, which is the biggest market for the MFI sector, has seen recoveries dipping to 10%. Besides banks have stopped lending to MFIs choking fund raising.