Kolkata, May 20 (IANS): City-based microfinance firm Village Financial Services (VFS) on Wednesday said banks need to extend credit support to more microfinance companies to realise the goal of financial inclusion in the country.

"If we really want to reach out to the people still not availing banking facilities, the banks need to extend their credit support to more microfinance institutions (MFIs)," Kuldip Maity, managing director and CEO of VFS, said here on Wednesday.

Maity was speaking at a banking summit organised by the Association of Micro Finance Institutions - West Bengal.

He said bank credit facilities need to be provided to MFIs in "larger volumes, especially to those organisations who are working in the rural and remote corners of the state as they face funding problems".

The micro-financier said the MFI segment has matured in the country as it is now regulated by the Reserve Bank of India and monitored by self-regulatory bodies.

"Credit bureaus are also playing a pivotal role by maintaining proper records of borrowers that reduces chances of over-indebtedness at the borrower level," he said.

Maity said once the Micro Units Development and Refinance Agency (MUDRA) Bank starts working, credit flow to MFIs in the country will increase.

The MUDRA Bank, launched in April this year, is aimed at providing credit facilities to the nation's micro-small-medium business segment through MFIs.

"There is a huge demand and supply gap in the credit flow in West Bengal and eastern region (in India)," he said.