Indian Microlenders Face Collapse, Warns Agency

The Indian government may be forced to step in to save the country's $6.7-billion microfinance industry from collapse warns  a leading industry ratings agency. The Microfinance Institutions Network or MFIN, which represents 44 leading Indian microfinance lenders, has said commercial bank loans to the sector are drying up and borrowers are reneging on their debts. India's microfinance industry, which surged to prominence when George Soros-backed SKS Microfinance raised $358 million in an IPO, faces a regulatory clampdown that could erode profits and hurt growth.

Reports of dozens of suicides by poor borrowers in Andhra Pradesh, the hub of India's microfinance sector, prompted the state to enact rules against aggressive recovery practices by lenders who make loans that average about $150 to poor customers at interest rates that can go up to 36 per cent. Lenders were accused of aggressive debt collectors who were blamed for over 30 suicides. Andhra Pradesh's share of outstanding microfinance loans accounts for around 35 per cent of the sector's total $6.7-billion portfolio. Before the crisis, the sector boasted loan repayment rates of 99 per cent.

The finance minister said this week that he expects the industry to develop a code of conduct on interest rates and recovery practices, while the central bank recently set up a panel to study issues surrounding the sector. The Andhra Pradesh government had introduced a measure aimed at halting "harassment" of borrowers, imposing penalties of up to three years in jail and Rs 100,000 ($2,000) in fines for attempting to coerce borrowers.
 
The rise of for-profit microfinance has made billions of dollars in credit available to millions of poor people in India and elsewhere, but it has also spurred controversy. India is home to roughly 400 microfinance lenders with a combined Rs 207 billion ($4.6 billion) in outstanding loans to 70 million poor people. The 10 largest players account for roughly 80 per cent of the industry. With a potential base of 120 million unbanked homes, microcredit demand in India has the potential to rise sharply. New rules are expected eventually to bring down interest rates, and reduce aggressive lending and collection practices, potentially squeezing out smaller players. Ultimately, that could make the industry more transparent and accountable, if less profitable. Critics are uncomfortable with high profit margins earned from poor borrowers, and worry that the social mission of microfinance has been sidelined in favour of profits. 

 (extract from BW)

Ground zero

The ongoing furore over the so-called Ground Zero Mosque shows no sign of abating after weeks of noisy controversy. In a sense, it has become a litmus test of America’s cherished freedom of worship, as well as its tolerance of other people and other faiths.


The project is expected to cost around $100 million, and many think the bulk of the money will come from Saudi Arabia, even though the source of the funds has not been made public yet. If this is indeed so, this would be a slap in the face of Americans as “nine of the jihadis in the Twin Towers calamity were Saudis”. Saudis have been funding mosques and madressahs around the world, in addition to paying for chairs for Islamic studies at major universities. Many of these have been used to project the country’s official Wahabi version of Islam that has fuelled the rising tide of extremism and jihadi fervour. Why the $100 million can’t be put to use to help others who actually needs the funding like in Pakistan instead? This is especially relevant in the context of the floods that are devastating much of Pakistan today.

Now the question is about reciprocity: if the Saudis can aggressively spread their ideology abroad, why can’t other beliefs build their places of worship in Saudi Arabia? 

Currently, it is illegal to build a church, synagogue or temple in that country. Even importing copies of the Bible or the Torah is forbidden. Granted, Saudi Arabia is not an example of tolerance and freedom of worship. In fact, it is one of the most benighted societies on the planet where the royal family rules with an iron hand in partnership with the clergy. Nevertheless, every time the government or individual members of the ruling House of Saud wish to fund a religious centre abroad, they should be asked to open up their country to other faiths.

Edited version of Mr. Irfan Husain ‘s article published in Dawn

Superbug

Medical tourism may not be safe in India because the ‘superbug’ possibly originated in India suggested a British  publication and further went on naming notoriously  “New Delhi metallo-blactamase (NDM-1). The growth in the flow of patients from the developed to the low cost developing world for medical treatment has consistently worried the medical fraternity in the West.  In order to slowdown the  patients flow the west came up with the story which  sponsored by  European Union,  The Wellcome Trust, and drugmaker Wyeth  who markets the superbug antibiotic Tygacil  (tigecycline) .

Such antibiotic resistant bacteria have been reported everywhere in the world, including in the UK, the US and the entire developed world for decades. The NDM-1, for instance, has even been detected in Canada, Australia, The Netherlands and Sweden.   So why India to be blamed. Similarly   genesis of MRSA is in the West . So was  West was blamed for a disease that affects the entire world.

Rather than creating controversies around the origin of the bacteria, it is better to focus on the lack of interest among pharma companies to develop superdrugs for such superbugs.