Previously the largest deal was a $37m investment in SKS in late 2007by a group that included Sequoia, Silicon Valley Bank and Vinod Khosla,founder of Sun Microsystems.Microfinance has also been favoured by “social investors” who areinterested in social as well as monetary returns, such as Legatum andOmidyar Network, set up by eBay founder Pierre Omidyar. Last yearthey each invested $10m in Unitus Equity Fund, a US fund that investsin microfinance in India and Latin America.Although the largest MFIs are more insulated from the impact of thefinancial crisis, dozens of smaller MFIs have been dealt a stinging blow.Banks tend to fund the big players while ignoring fledgling MFIs,resulting in slower growth rates.“When banks are flush with funds, microfinance is fashionable to investin and is a priority. However, when liquidity dries up, it’s no longer apriority. Fund flow to the microfinance sector has been severelyreduced,” said Vipin Sharma, chief executive of Access, a leadingmicrofinance advisory company in India.Banks are “a lot more cautious about lending”, agreed P N Vasudevan,managing director of Equitas, a new MFI that launched in Chennai inDecember 2007. “There’s definitely a slowdown, there’s no questionabout that.”Mr Vasudevan says his customers continue to repay loans at high ratesbut because of less liquidity from banks, Equitas’ growth projectionshave tapered. It had targeted reaching 450,000 total customers by theend of this month but the figure will remain closer to 350,000.