In the name of protecting India’s poor, the state government of Andhra Pradesh has caused deep turmoil in microfinance. A new law clearly signals that borrowers need not repay their small-scale loans. Not surprisingly this has led to large-scale default, throwing the industry in India into a crisis it may not survive. This is having repercussions for microfinance worldwide.
Banerjee, Abhijit, Pranab Bardhan, Esther Duflo, Erica Field, Dean Karlan, Asim Khwaja, Dilip Mookherjee, Rohini Pande and Raghuram Rajan. "Microcredit is not the Enemy." Financial Times, December 12, 2010.