India: Micro-Finance Gone Awry

December 30th, 2010
in Background

The Economic Times:  The year 2010 was not good for Microfinance Institutions (MFIs). They entered the year on a high. Growth rates were dizzying. Players were readying to raise money from capital markets.

Follow up:

The segment was getting hosannas for being virtually the only financial intervention by the formal sector that reached the poorest of the poor. And now, as 2010 roils to a close, the MFIs are staring at heavy losses in its largest market, Andhra Pradesh, an uncertain regulatory future, and a greatly tarnished image.

What went wrong? The year began poorly for the MFIs with the RBI deputy governors telling that that the central bank was aware of the extent of benami loans being given by MFIs, the practice of writing off bad loans and sloppy corporate governance in some of the entities. That was in January.  Read more.....

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