Microfinance Under Microscope

A few weeks ago I posted this article (CLICK HERE) from the New York Times talking about high interest charges, high default rates and the rough collection practices in India. The NY Times article also pointed to the fact that people were trapped in a debt cycle with multiple loans, which prohibited them from making any financial progress. There were talks about capping the interest rates that MFIs charge. The Economist in their issue dated November 20th-26th 2010 came out against the capping of interest rates arguing that it will "hurt the poor." It went on to suggest that MFIs may be able to allow very poor people to save by offering small amount savings accounts as "they already have existing relationships with the kinds of people who would use such basic savings accounts." The article concluded by saying that "fewer restrictions on microlenders, not new ones, would be the best way of helping the poor."

According to an article in The Kathmandu Post (CLICK HERE)  there is a conference on Microfinance going on in Kathmandu, Nepal. The conference "organized by the Rural Microfinance Development Centre (RMDC), Nepal and the Institute of Microfinance, Bangladesh in cooperation with the SAARC Secretariat, Nepal, the two-day regional conference entitled “Microfinance in SAARC Countries: Sharing Lesson and Way Forward” aims to present the state of microfinance in SAARC and discuss key issues of sustainability and regulation of microfinance institutions in the days ahead."

Let us wait and see what they say about the state of microfinance in Nepal and the region when they release their report at the conclusion of the meeting.