Millions of Indian households rely on microfinance – small loans available to the poor as an alternative to traditional banking credit. For many, it is a lifeline, and often the only way to begin a business.
But despite the industry recording a 10% growth in its loan book this year, there is also a huge increase in borrowers defaulting on payments. After the pandemic, the cash crunch is even bigger, experts say. What is at the root of the crisis? Is it the exorbitant rates of interest charged by microfinance companies, or the easy availability of multiple loans to borrowers? What can be done to tackle the endless cycle of debt that micro loans create?
Presenter: Devina Gupta Contributors: Amit Arora, senior sector specialist, Rural and Development Finance; Devesh Sachdev, founder and CEO, Fusion Microfinance; Swati Sinha, CEO, Microfinance.ai