New Rules in India Sink SKS Shares
Friday, October 15, 2010
MUMBAI-Shares of SKS Microfinance Ltd., one of the world’s largest microloan companies in terms of borrowers, tumbled on Friday after the southern Indian state of Andhra Pradesh created new restrictions on the microfinance industry in reaction to a recent string of suicides by borrowers.
SKS and many of India’s biggest microlenders are based in Hyderabad, the capital of Andhra Pradesh. The state is planning to adopt new rules to govern the companies. Microfinance institutions hand out loans of $50 to $200 to tiny entrepreneurs.
There has been such an explosion of microlending in the state and across southern India that some analysts have been concerned the region was heading towards a micro-lending debt crisis with too many microfinance companies competing to lend too much to unqualified borrowers.