Home > Uncategorized > 25 reasons why you should not invest in microfinance companies

25 reasons why you should not invest in microfinance companies

I read a seething  here http://microfinanceafrica.net/news/twenty-five-reasons-why-one-should-not-invest-in-micro-finance-companies/  that gives 25 reasons why microfinance companies are as unwise as buying mortgage derivatives pegged on the American home loan market! The writer is clearer very very agitated and goes into extreme lengths to describe the compensation packages of the members of the SKS Board -the first microfinance company in india to go public.(See earlier post Do IPOs work in the microfinance industry). Some of his remarks are plainly written in anger although some points raise valid points such as the 18 suicides that have occurred in Andra Pradhesh which is the region that SKS operates in and has huge market share in terms of its loan book. The post is limited in fact and fails to detail the good things that microfinance has done in some of the poorest areas in India nd Bangladesh, Prasana focusses on the areas that we all agree need to be reviewed as far as microfinance is concerned such as regulating interest rates, controlling multiple borrowing  and overall regulation in the sector. My view is that there should be a more balanced view on microfinance rather than this one which is hugely one-sided!

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