Abusive Microcredit Practices, Strict Law Threaten Women's Financial Inclusion Gains in Indian State - Analysts

    Women who have benefited from microcredit by in India. Photo by: Jessica Ridgewell / Find Your Feet

    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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    About the author

    • Ivy Mungcal

      As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.