New Delhi, April 1 -- The government's Rs.20,000 crore credit guarantee support for the microfinance sector, announced on 21 March, comes at a crucial time for smaller non-banking finance company-microfinance institutions (NBFC-MFIs), which are grappling with tight liquidity and risk-averse lenders.

In an interview, Sadaf Sayeed, chief executive officer of Muthoot Microfinance in New Delhi, told Mint the move could unlock lending, revive financial inclusion and support sectoral growth. Edited excerpts:

This is a very welcome step and something the industry has been requesting for a long time. The key issue we have been facing is liquidity, particularly for mid-sized and smaller NBFC-MFIs. While the larger institutions still have access ...