Microfinance leaves India banks in the dust

Hong Kong

MICROFINANCE is making India's big banks look bad. Small lenders that help the poor buy everything from bicycles to sewing machines are back and growing at breakneck speed after the industry nearly collapsed six years ago.

The last boom ended badly after a number of borrowers committed suicide. That prompted the authorities in Andhra Pradesh to effectively stop micro lenders collecting debts. The state once accounted for up to 40 per cent of industry loans. The Reserve Bank of India has since capped usurious lending rates.