Monday, November 1, 2010
India's Crisis in Micro-lending?
This article elaborates further on the micro-lending concept which was established in India to help the poor. Although, micro-lending helped millions of people out of poverty, this new report suggests that borrowers are angry with the ever increasing and fluctuating interest rates and have stopped paying back in order to retaliate, despite having the money to payback. The major complain is that lenders have been changing interest rates constantly which makes it very difficult for borrowers.
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2 comments:
This is tragic when you consider the original purpose of microfinance. This is why many in the microfinance community feel that MFIs should not be run for profit. Others, on the other hand, argue that firms run for profit are more efficient and effective at achieving their goals. Further study should be done to see which group is correct
This is very relevant to our guest appearance in class with Scott Bellows. It is sad that those the program are intended to help and being hurt, but as he mentioned in class, it is a very delicate level to set interest rates as they have to pay their workers, and would most likely not raise them too high in fear of being labeled as for-profit instead of non-profit.
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