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.