Microfinance searches its soul
By Rupert Walker
Finance Asia
Monday, March 28, 2011

"...More generally the industry has been criticised for usurious lending, encouraging over-indebtedness through multi-loans and driving farmers in the Indian state of Andhra Pradesh to suicide.

So it is not surprising that politicians in India and Bangladesh, where microfinance institutions (MFIs) have around 60 million clients, have made moves towards tighter regulation.  

In Bangladesh, the government has already capped the annual interest rate MFIs can charge at 27%, while similar moves are planned in India where “for-profit” MFIs have proliferated.

Against this uncertain background, three leading microfinance professionals discussed the outlook for the industry at the 14th annual Credit Suisse Asian Investment Conference in Hong Kong last week. There was some soul-searching and reflection about the current state of the industry, but also optimism about its prospects.

'MFIs can maintain their business models of generating both social and financial returns without sacrificing either,' said Roy Jacobowitz, managing director for external affairs at Accion International..."

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