Murmurs of a fresh crisis in the microfinance sector

A hundred suicides of microfinance clients can be termed ‘sporadic’, but each one of those stories has lessons for the majority intertwined in the system

The questions of microfinance, overlending and women’s suicides are cropping up all over again. The murmurs have been going on for a while, broadly indicating that the hotspots have shifted to eastern Uttar Pradesh and some other pockets.

In August, Parag Jariwala and Vikesh Mehta, both analysts at Religare Institutional Research, put out an analysis which indicated that all was not well, based on the amount of investment that was coming into the sector, the valuations of the expected returns and, therefore, the required growth rates.

In a recent article in The Wire, a news website, Chander Suta Dogra talked about field reports where many women are at the deep end of indebtedness and warned of another crisis brewing.

However, a recent blog by Vaibhav Anand and Aryasilpa Adhikari of IFMR Capital dismisses The Wire report as “sporadic” events and argues that drilled-down data analysis at the pincode level from credit bureaus does not indicate overheating.................Read more


Source: livemint


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