This documentary (thanks Al Jazeera) delves into the darker side of microfinance. With all financial innovation, indeed with much of finance and banking, there are good uses and bad uses. There are risks to everything - this is especially true in finance. Indeed, it can be said that debt is an accelerant, or fuel - it will speed your progress, regardless of where you are progressing to. But there is also the practitioner and regulator factors; where a fast growing industry with loose regulations can see less professional operators push the limits.
Microfinance has long been seen as a way to lift the destitute out of poverty. But recently it has been hit by headlines about scores of Indian borrowers driven to suicide. Critics say the industry has grown too fast, with loose regulation creating multiple loans to overextended borrowers and allowing some unscrupulous players to thrive.
A crackdown has now frozen microlending in the southern state of Andhra Pradesh, India's most important microfinance market, with the central bank stepping in to try and stop microfinance institutions from going bankrupt. Yet supporters for microfinance argue that extending credit to the poor, mostly women, has fostered small businesses, helped promote gender equality, lifted incomes, and improved access to food and education for some of the world's most desperate citizens.
This week on 101 East we ask, what is the future of microcredit in India? Can it improve people's lives, or is it driving the poor into new cycles of unending debt?
Finance Documentaries: http://www.financedocumentaries.com/2011/10/india-microfinance-banking-on-debt.html