Microfinance Faces Mega Default Risks

Jun 2010
London, United Kingdom, June, 18 2010 - Microfinance is expanding fast in emerging economies. The number of financial institutions piling in to grab a slice of the market is expanding at an even faster rate. The latest to make a move in the sector were the Indian conglomerate Aditya Birla and South Korea’s Smile Microcredit Bank. However, the microcredit system founded by the Nobel Prize winner Muhammad Yunus, whose Grameen Bank gave millions of people access to credit, is in trouble.In fact, it seems to be facing nothing less than a new subprime style crisis. Bloomberg’s excellent analysis on the subject points to a report by CGAP which shows that the number of defaults in the last 24 months has risen sharply in several emerging countries.

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Source : Financial Times

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