Nov 26/10 - Pt 3: Micro-Credit Loans

Micro-credit loans for the world's poorest people were supposed to bring a revolution in poverty reduction. But now, micro-credit loans are being blamed for a rash of suicides ... there is talk of reigning in sky-high interest rates ... and India's micro-credit industry is in disarray.



PART THREE

Micro-Credit Loans - Sowmya Kidambi

Meva Lal lives in a small village near the city of Lucknow in northern India. He took out a micro-finance loan for the equivalent of 400 dollars to start a small dairy business. And he's struggling to keep up with the payments.

Micro-credit lending was supposed to spark an anti-poverty revolution The idea was that small amounts of money loaned to individuals or groups of people--who couldn't otherwise get credit--would dramatically alter those people's lives. For a while, it was hailed as a game-changing idea . But there are now growing concerns about how micro-credit is working in practice.

The original micro-credit lenders operated on a not-for-profit model. Now many are pursuing-- for-profit --ventures. Some have even gone public, with shares traded on the open market. As a result, hundreds-of-millions of dollars have been funneled into the sector.

Today in India, the micro-credit industry is in turmoil. And the aggressive tactics of debt collectors are being blamed for dozens of suicides. Sowmya Kidambi is an activist who works with an independent body set up to conduct social audits in the Indian state of Andhra Pradesh. But today she was in Colombo, Sri Lanka .

Micro-Credit Loans - Muhammud Yunus

Muhammud Yunus is widely considered to be the father of the micro-credit movement. He's the founder of Grameen Bank in Bangladesh. It's owned by the rural poor who are also its clients. In 2006, Muhammud Yunnis won the Nobel Peace Prize for his work on micro-credit. He was in Dhaka, Bangladesh.

Micro-Credit Loans - Vijay Mahajan

Vijay Mahajan is the CEO of BASIX, one of the biggest micro-credit companies in India. He's also the President of the Microfinance Institutions Network, which represents India's leading micro-finance lenders. And he says that despite the problems, there is a place for for-profit companies in the micro-lending world. Vijay Mahajan is usually based in Hyderabad but this morning he joined us from Bangalore, India.

Last Word - David Gutnick in Haiti

And we'll leave you with something we're working on for next week. Haitians will go to the polls this weekend to elect a new President. The country is still recovering from last January's devastating earthquake. And add to that, the country is facing a cholera outbreak.

The CBC's David Gutnick is heading back to Haiti this weekend. And he'll be sharing his stories with The Current on Monday... the day after the vote. David Gutnick got the last word this morning.

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