Public sector lender Indian Overseas Bank is gearing up to regain its lending to micro finance institutions (MFIs). The decision has been taken following the good charter of loan recovery observed from some of the big MFIs like SKS Microfinance in the first quarter of this fiscal.

"Though we have not disbursed any fresh loans during the quarter but we will now increase MFI exposure. It seems, all the risk factors have eased. Good amount of loan recoveries also promted us to expand the book," S N Mishra, general manager (corporate lending), IOB said.

Current reports say that IOB's current NPA status from the MFI sector happens to be zero.

Also it has a total exposure of around Rs 630 crore for this quarter as compared to Rs 650 crore in the quarter prior to this.

"We will increase focus in microfinance sector. After the Malegam committee recommendation, a lot of doubts are cleared about the sector. Now, there is no harm in giving loans to rated micro finance companies," CMD of the bank, Mr M Narendra said.