Monday, December 13, 2010

Muhammad Yunus on the microcredit troubles in India

Muhammad Yunus has weighed in on the microcredit crisis in India. The suicides of 17 borrowers has led to a government investigation of microcredit bank practices. Some new laws have been implemented and some accuse the banks of charging outrageous interest rates.

From this AFP article that is hosted at Google News, we read more comments from the man who started microcredit.

India's biggest lender to the poor, SKS Microfinance, has been in the spotlight following a series of suicides among debt-laden villagers in Andhra Pradesh state, where authorities have reacted by ordering a crackdown on microfinanciers.

"A lot of people are misusing and abusing the concept and use it as vehicle to make money. And SKS is a big example in this regard," Yunus told reporters in Dhaka, the Bangladeshi capital.

He said SKS boss Vikram Akula had set up a non-governmental organisation and transformed it into a profit-making company which he then launched on the Mumbai stock exchange.

"It's a complete detour and nothing but a quitting of the (microfinance) mission," said Yunus, who won the Nobel Peace Prize in 2006 for his Grameen Bank's microfinance work.

"The original micro-credit concept cannot be blamed for their faults," he added.

The microfinance industry in India, once seen as a saviour of the poor, is in crisis after criticism of the alleged abusive practices by debt collectors and high interest rates.


Rajan Alexander said...


The die has been cast with the introduction of the Andhra Pradesh Micro-Finance Regulatory Bill in the State Assembly yesterday. The Bill to replace the ordinance passed by the government in October 15th is scheduled to be discussed this coming Tuesday and passed as an Act by Wednesday, tightening the noose around MFIs.

So where is the future policy environment going?

Read More:

MoralHeroes said...

That is sad to hear, I hope they find the reason for the suicides.

I thought you might be interested to know that Muhammad Yunus is featured as Hero of the Week over at

Here is a link to his page: