[p2p-research] Micro-Finance in India Stumbling

[Michel Bauwens]

it seems to me that what was probably a genuine innovation in bangladesh
under yunus, has become fodder for proft maximisation outfits that are using
the model for other purposes ..

it may be just a case of inadequate regulation,

Michel

On Fri, Nov 19, 2010 at 8:34 PM, Dante-Gabryell Monson <
dante.monson at gmail.com> wrote:

> I just read an article in french from "L'Echo" , updating about the
> stumbling of Micro Credit in India ( which I can send to you in pdf if you
> like ).
>
> It basically says that Micro Credit is stumbling in India, including
> through political pressures.
> That it is accused of hyper profitable operations with high interest rates,
> leading to suicides, or prostitution to pay off debts.
>
> The article also says that the Government of Andhra Pradesh, one of the
> Indian States,
> where one third of micro credit loans in India have been made,
> has set controls on micro credit businesses, putting them on hold.
>
> At a national level, the central bank of India has set up a special
> investigation,
> with the minister of finance of New Delhi, Pranab Mukherjee, declared micro
> credit interest rates exorbitant.
>
> You can also read this in a english article on the net :
>
>
> http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/finance/India-microcredit-sector-faces-collapse-from-defaults/articleshow/6946275.cms
>
> excerpt :
>
> *India’s rapidly growing private microcredit industry faces imminent
> collapse as almost all borrowers in one of India’s largest states have
> stopped repaying their loans, egged on by politicians who accuse the
> industry of earning outsize profits on the backs of the poor. *
>
> I also found the following article in English written *"in 2006"* , which
> gives a very interesting and more in depth overview on potential problematic
> developments in India - including comparisons with Bangladesh :
>
> http://www.rediff.com/money/2006/nov/10spec.htm
>
> excerpts :
>
> *"the funds are often being used not as seed money for a new enterprise,
> such as buying a cow to sell the milk or setting up a fruit stand, but as
> handouts spent on consumption."*
>
> *"In India rates average 30 per cent a year, though some lenders charge
> more than 45 per cent.*
>
> *"In their anxiety to expand very fast, they are pushing loans," says Rao,
> the microcredit campaign organiser. "They're not careful in vetting." *
>
>
> On the internet, I also found the following recent article
>
> http://www.isnare.com/?aid=641434&ca=Business
> *
> *
> *The micro-credit loan interest rate is usually 25% -100%*
>
> This reminds me the following :
>
> http://en.wikipedia.org/wiki/Loan_shark
>
> A *loan shark* is a person or body that offers unsecured loans<http://en.wikipedia.org/wiki/Unsecured_loan> at
> high interest rates <http://en.wikipedia.org/wiki/Interest_rate> to
> individuals, often enforcing repayment by blackmail<http://en.wikipedia.org/wiki/Blackmail> or
> threats of violence <http://en.wikipedia.org/wiki/Violence>.
>
>
> ---------- Forwarded message ----------
> From: Franco
> Date: 2010/11/19
> Subject: [gtm] La mirco-finance indienne vacille
> To: "gtmonnaie at gtmonnaie.be" <gtmonnaie at gtmonnaie.be>
>
>
> Bonjour,
>
> En annexe un article de L’Echo sur le sujet.
>
> Franco
>
>
>
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>


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