Lenders under the aegis of the Micro Finance Institutions Network (MFIN) are seeking the restoration of the 12 per cent margin for all.

The Reserve Bank of India (RBI) recently issued fixed the margins of micro finance institutions at 10 per cent for those institutions that have loan portfolio of more than Rs 100 crore, and at 12 per cent for others.

Alok Prasad, chief executive of MFIN, said the new system needed to be rationalized. He said that the central bank should allow them to retain a flat 12 per cent margin instead of slabs of 10 per cent and 12 per cent.

Speaking on the topic, Prasad said, "We are seeking the restoration of the 12% margin for all. In fact, we are not asking for any hike but status quo ante."

However, he added that some members of the MFIN even thought that even the 12 per cent would not be doable. But, he didn't elaborate on why the amendment should be made.

Micro finance companies are arguing that they are unable to pocket any profits because the heavy operations costs have to be absorbed into the margin spread.

The all India microfinance market peaked at around Rs 30,000 crore in 2010, but since then it has slipped to nearly Rs 16,000 crore.