On Thursday, December 9, 2010 The Center for Global Development was pleased to host The Global Implications of India’s Microcredit Crisis. The event featured presentations by David Roodman, Senior Fellow at the Center for Global Development; Stephen Rasmussen, Technology Program Manager, CGAP, World Bank; Swaminathan Aiyar, Consulting Editor, Economic Times; Liliana Rojas-Suarez, Senior Fellow at the Center for Global Development and Beth Rhyne, Managing Director, Center for Financial Inclusion, ACCION International. Lawrence MacDonald, Vice President of Communications & Outreach at the Center, served as moderator.
The largest crisis in the history of microfinance is now unfolding in India. After five years of growth so fast it has been described as “indescribable,” and after a lucrative initial public offering (IPO) by the leading firm, the government of the state of Andhra Pradesh has cracked down. Amid reports of microcredit-linked suicides, the state has urged borrowers to stop repaying, and millions have heeded the call. Bankruptcies of some of the world’s largest microcreditors are now a realistic possibility.
What is the reality of microcredit in India? Is the backlash an engineered campaign to protect a government-run (and World Bank–financed) finance program from private-sector competition? Or has the fast growth in credit ensnared the poor in debt? Some of each?
And what lessons does the crisis hold for actors worldwide, including microfinance institutions and investors ranging from the World Bank to Kiva users? When is microcredit—and investment in it—too much of a good thing?
To view the recorded event, please click here.