[p2p-research] Micro-Finance in India Stumbling

[Dante-Gabryell Monson]

In attachment, an article in french from "L'Echo"

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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