Burgeoning microfinance in India potentially spelling overleverage?
By Andrew McCarthy
The Wall Street Journal posted an article on Wednesday on the new linkage between MFIs and credit bureaus in India. A rapidly growing microfinance market has created multiple lenders in a market, giving consumers the potential to borrow from multiple sources and potentially get over their heads in debt. While creating transparency standards between MFIs and credit bureaus is a good first step, this sounds strangely similar to the roots of the American credit crunch. With increased $$$ entering the region to uneducated borrowers, the threat is high to create a new society fueled on leverage and indebtedness. Let the American consumer be an example of what can happen with loose lending standards and uneducated borrowers accepting too much debt. There should be education provided to borrowers on the dangers of indebtedness and regulation on proper lending standards among MFIs.
Visit World News: India To Track Microloan Borrowers on WSJ.com for more info.
