A prevailing climate of default, distrust and desperation fueled by abusive microlending practices and a subsequent legal clampdown threatens to reverse progress made toward the financial inclusion of poor women in the southern Indian state of Andhra Pradesh, analysts have warned.
The microcredit industry in the state has boomed in the past few years but has become increasingly marred by coercive loan practices, which the state government is blaming for the increase in the number of suicides in the area, The Washington Post notes. The state government has then adopted a new law that, observers note, has brought the entire industry to a halt, the newspaper adds.
The law has also prompted widespread loan defaults, which pioneers and proponents of the microfinance movement in the state said could undo the progress they have made in demonstrating that poor women are also creditworthy, The Washington Post says.
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