Study: How microfinance may lead to indebtedness
By Arjun Srinivas
In India, where access to the formal banking system is restricted, microfinance emerged as an important and popular alternative in the 2000s. However, the 2010 microfinance crisis in Andhra Pradesh, which saw a spate of suicides among over-indebted clients, exposed the vulnerabilities in the microfinance model.
A new study by Sougata Ray and others, published in the Economic and Political Weekly, explores why and how over-indebtedness continues to be a problem for microfinance borrowers in India, particularly in rural areas.
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