- Wealth PMS (50L+)
Some disturbing links about Micro-finance Institutions (MFIs) recently:
Responding to a chorus of complaints over a spate of suicides in the state allegedly due to pressure from microfinance firms, state government officials, including the chief minister, on Tuesday, threatened action in the form of a law. “The state government will soon bring an ordinance to control microfinance institutions,” chief minister Rosiah told reporters in New Delhi. “The government has started taking the opinion of legal experts and from the Attorney General ,” he added.
We don’t know what kind of regulations there will be but it’s likely to have an interest rate cap, limited recovery options and will impact 40% of the MFIs in the country (that many operate in AP).
The industry’s under threat; microfinance is necessary but obviously not under these circumstances. The bigger deal will be when people just stop paying – either as a revolt or simply because they can’t. Handling that, for an industry born in a boom will be essential.