Microfinance Institutions Network (Mfin), the industry body of microfinance firms, is discussing the future course of action to tide over the huge debt burden haunting the sector.

Earlier, Reserve Bank of India (RBI) rejected Mfin's request to restructure the loan repayment of five heavily indebted microlenders under the corporate debt restructuring (CDR) facility.

These five lenders are said to be on the verge of defaulting. Under CDR, banks typically stretch the repayment period of stressed borrowers, slash lending rates and offer a repayment holiday. RBI turned down the request in a letter dated July 23.

The five beleaguered microfinance institutions (MFIs) include Bhartiya Samruddhi Finance Ltd (Basix), the country’s oldest microlender, which has been battered by a controversial Andhra Pradesh law three years ago.

MFIs lend small amounts to poor borrowers at a rate of 24-36 percent and mainly source money from banks to do business.

The other firms that sought relaxation from the apex bank are Spandana Sphoorty Financial, Trident Microfin Pvt, Share Microfin and Asmitha Microfin. These firms are struggling to recover loans from Andhra Pradesh, once their largest market.