Andhra Pradesh 2010 : global implications of the crisis in Indian microfinance : Andhra Pradesh 2010 : implications mondiales de la crise de la microfinance en Inde (Français)

Andhra Pradesh, the fifth most populous state in India, is home to five of its largest for-profit nonbank finance companies, all of which began in the 1990s as microfinance institutions (NBFC MFIs). The state-supported self-help groups (SHGs) have an...  Voir la suite Andhra Pradesh, the fifth most populous state in India, is home to five of its largest for-profit nonbank finance companies, all of which began in the 1990s as microfinance institutions (NBFC MFIs). The state-supported self-help groups (SHGs) have an even wider reach and account for more debt than MFIs alone, although the latter is less flexible with its repayment options and interest rates. Aptly dubbed the capital of microfinance, Andhra Pradesh began undergoing a microfinance crisis in October 2010 that is in many ways a microcosm of the larger one that grips India. (The average microfinance debt per household in Andhra Pradesh is more than eight times that of the national average). Since its conservative beginnings in the 1990s, borrowing regulations have loosened to allow banks the authority to lend many times that of the savings of members, thereby creating situations in which borrowers are perpetually unable to repay their loans. Limits and regulations that were initially established to prevent these kinds of scenarios were increasingly shunned in favor of the lure of higher returns on assets. The image of the MFI has also altered somewhat over the years; large profits and lavishly-compensated executives do not bode well for these institutions that started out to meet the lending needs of the poor and disenfranchised. At the forefront of the crisis was the closing of 50 branches of four MFIs. With three-quarters of the population unable to access safe places to save, transfer, and borrow money, it would be naïve to simply condemn MFIs. This note is of the opinion that there continues to be a role and function for them, but not without significant reforms. Now as it was in the decade of their founding, these institutions operate best when girded by ethical lending principles that dictate offering only what poor people need.  Réduire

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