Although flow of credit from lenders to mid-size microfinance institutions (MFIs) has improved significantly since last week, small MFIs are still facing the challenging situation on the back of liquidity stress. Microfinance Institutions Network (MFIN), the industry body, however, said it doesn\u2019t foresee any impact on loan disbursement growth for the country\u2019s microfinance industry in the third quarter this fiscal. \u201cNBFC-MFIs are not in a liquidity negative situation compared to any other NBFCs. Particularly, mid-size and large-size MFIs are not currently facing cash crunch situation. There are particularly some issues related to small MFIs, which are dependent on NBFCs for cash flow,\u201d MFIN president Udaya Kumar told FE. For easing the cash flow situation for small MFIs, MFIN is facilitating setting up of a common securitisation pool. \u201cIt will be a faster way of coming out of the situation. Small MFIs don\u2019t need too much of money. The pool could come up in the next two-to-three weeks time after some due diligence procedures by banks,\u201d Kumar said. In terms of disbursement, small MFIs\u2019 contribution to the industry is around 9%. Kumar said bankers were \u201cquite happy\u201d to subscribe the pass through certificates (PTCs) for setting up the common pool. \u201cIt will be one pool of multiple organisations. It will help create liquidity for the long-run. The size of the pool is not yet finalised.\u201d \u201cAt the industry point of view we don\u2019t face any problem. There may be some issues at some institutional level, but on overall perspective, I don\u2019t see a problem. Some banks may be taking some additional time to go back to their boards for taking fresh exposures to MFIs. And pricing might have gone up by 25-50 basis points because of the scarcity of funds. This cost will go up not only for MFIs, but also for everybody,\u201d Kumar said, adding on a quarter-on-quarter basis, there should not be any change in the loan disbursement growth for the December quarter. The MFIN president said during the September quarter of this fiscal the industry registered a disbursement growth of around 7%. HP Singh, chairman and managing director of Satin Creditcare Network, the second-largest microfinance company in the country, said, \u201cFor NBFC-MFIs, we do not have an asset-liability management (ALM) mismatch the way other finance companies have. The reason being we provide credit to borrowers for up to two years and all our borrowings are for more than two years, so we will never have a short-term liquidity deficit at any point of time.\u201d \u201cOn back of liquidity crunch, banks cut down lending to small and some mid-size NBFCs. That is why some mid-size and small MFIs are facing slight challenges in getting their liability. Large MFIs are not facing any sort of problem, all of us have liquidity worth of about `1,000-1,200 crore which is going to last at least five to seven months,\u201d Singh said. He, however, said during the December quarter of FY19, loan portfolio growth for the microfinance industry may come under some pressure. \u201cBanks and NBFCs were in a panic mode after the IL&FS crisis. NBFCs had almost stopped fresh lending due to the liquidity stress. Banks were taking time in disbursing to the MFIs. Because of the low funding situation, disbursement of MFIs were down by 30-50%,\u201d said Kuldip Maity, MD & CEO of Kolkata-based microfinance institution VFS.