Whenever an investor selects or buys a stock one should evaluate if the business model sustainable in next 5-10-15-20years and when you buy a stock a futuristic business model should be in place. We have seen many business model collapse .DOT.COM in 2000 is one good example. Finance has been one best business model for centuries but when political intervention is there it will ruin as we know PSU bank lending before.
Micro Finance as we understand is to take financing @ affordable to masses of the society it would be best suited for non-profit organization and when that is the case profits would be hard to come. I doubt if Micro finance is sustainable model in India which is politically very sensitive and Re.1 Rice+ free Color Television and many more freebie scheme to make poor poorer is realty.
Very good article read few comment from politicians who say don’t pay money and article also states this was one reason for U.S Subprime. Lending Money is very bad business and it is done only by rich and they should forego has been mindset for long.
http://online.wsj.com/article/SB10001424052702304316404575580663294846100.html
The micro lending movement that was supposed to help lift millions of people in India out of poverty has in recent weeks fallen into chaos. Urged on by local government officials and politicians, thousands of borrowers have simply stopped paying lenders, even though they have the money. The government has begun ratcheting up restrictions, fearing that borrowers are being buried by usurious interest rates. In some cases, officials have even arrested lending agents for allegedly harassing borrowers.
Local politicians, meanwhile, have blamed dozens of suicides on microlenders and are urging borrowers not to pay back what they owe.
The crisis is in some ways reminiscent of recent debt problems in the U.S. Microfinance is targeted at a population that is overlooked by the mainstream banking industry, the same social niche targeted by payday and subprime lenders in the U.S.
http://akprabhakar.blogspot.com/2010/10/sksmicrofinance-avoid-let-dust-settle.html SKSMICROFINANCE-Avoid let the dust settle -Avoid –SKSMICROFIN Cmp Rs.1135
The Andhra Pradesh government has appealed to the bankers to extend revolving cash credit to the poor women in a bid to prevent them from seeking loans from microfinance institutions (MFIs). MFIs have been in the news over the recent months allegedly for driving a huge number of their loan-seekers to suicides. Strong arm tactics have led to violence and in an incident yesterday, a girl committed suicide after being beaten by four loan recovery agents who were hunting for her mother. http://www.financialexpress.com/news/women-to-flee-microfinance-institutions/702258/
http://blogs.wsj.com/indiarealtime/2010/10/25/indias-microlenders-still-struggling/
India’s microlenders this week are anxious to see whether they will actually be allowed to start distributing and collecting payments for the tiny loans they make to poor borrowers.
http://akprabhakar.blogspot.com/2010/10/sksmicrofinance-avoid-let-dust-settle.html SKSMICROFINANCE-Avoid let the dust settle -Avoid –SKSMICROFIN Cmp Rs.1135
The Andhra Pradesh government has appealed to the bankers to extend revolving cash credit to the poor women in a bid to prevent them from seeking loans from microfinance institutions (MFIs). MFIs have been in the news over the recent months allegedly for driving a huge number of their loan-seekers to suicides. Strong arm tactics have led to violence and in an incident yesterday, a girl committed suicide after being beaten by four loan recovery agents who were hunting for her mother. http://www.financialexpress.com/news/women-to-flee-microfinance-institutions/702258/
http://blogs.wsj.com/indiarealtime/2010/10/25/indias-microlenders-still-struggling/
India’s microlenders this week are anxious to see whether they will actually be allowed to start distributing and collecting payments for the tiny loans they make to poor borrowers.
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