The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Microfinance: Upstart sector is put on the straight and narrow

Indian committee suggests controls on microfinance; Central bank keen to foster lending in remote areas

Microfinance is at a crossroads on the subcontinent. Muhammad Yunus is under investigation in Bangladesh by a government determined to discredit the Grameen Bank founder and Nobel Peace Prize laureate for deigning to seek higher office.

In India, the situation is worse. A spate of suicides in the impoverished southeastern state of Andhra Pradesh, most occurring in late 2010, were blamed on overzealous, even aggressive debt repayment collections by microfinance institutions (MFIs).

The Society for Elimination of Rural Poverty totted up 54 suicides in October alone. Most, SERP said, were caused by microfinance companies seizing houses, cars and even sewing machines, and hounding villagers to pay for the losses of family members and neighbours.

India’s normally sluggish parliament acted swiftly, setting up a committee headed by Reserve Bank of India board member YH ­Malegam. In January, the self-styled Malegam committee issued a report suggesting that loans by micro lenders be capped, with a maximum size of Rs25,000 ($550) and an interest rate ceiling of 24%. Other recommendations included the creation of a new category of non-bank financial companies, to be regulated by the RBI.

This put microfinance in a jam. On the plus side, the industry at last looks like getting the regulation it needs and deserves.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree