Indian Microfinance Crisis of 2010: Turf War or a Battle of Intentions? – An Intellecap White Paper

Recent allegations against Indian microfinance institutions (MFIs) by the media and the State have thrown sector stakeholders into a crisis. Accusations against MFIs include coercive practices, lack of transparency, and “usurious” interest rates. These accusations have resulted in the passage of an Ordinance by the State Government of Andhra Pradesh (AP). Intellecap, an India-based social business advisory firm and publisher of Microfinance Insights, has released a White Paper in response to the crisis. Thought-provoking and informative, the White Paper analyzes the buildup to the crisis in AP, attempts to revisit some fundamentals of the business, and questions the effectiveness of radical approaches to multiple bottom-line business by the State and the media. We welcome your comments.

Download Intellecap’s White Paper here.

(Credit: Microfinance Insights)

1 comment
  1. Himanshu said:

    By one of my favorite profs at IIM-A

    My two cents on the whole issue:

    1) Banks with ceiling on interest rates have not been able to make money. It may be argued that Money making is not the goal of MFIs. Agreed. However, all other options tried by govt have not led to encouragement of investments in micro-businessess. Also, succesfull microbusinesses generally provide more percentage returns than large businesses. since the risk is high chances of bad loans is also higher. So the reward for risk is justified

    2) What is not justified are the methods used to wriggle out money from those whose ventures have not been successfull

    3) Equally despisable is the tacit encouragement to default by politicians in numerous public speeches in AP

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