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Indian banks have handed out billions of dollars in loans to some of the poorest people in the world, and now they’re worried about a collapse, the NYT reports.Now politicians in one India’s largest state, and others around the country, have encouraged borrowers to default, in order to protest what they call exorbitant loans.
Here’s a typical microcredit loan, from the Times:
Government officials in the state say they had little choice but to act, and point to women like Durgamma Dappu, a widowed laborer from this impoverished village who took a loan from a private microfinance company because she wanted to build a house.
She had never had a bank account or earned a regular salary but was given a $200 loan anyway, which she struggled to repay. So she took another from a different company, then another, until she was nearly $2,000 in debt. In September she fled her village, leaving her family little choice but to forfeit her tiny plot of land, and her dreams.
Microcredit started as an altruistic device, like subprime mortgages in America, but have turned into big business. India’s largest for-profit lender, SKS Microfinance, just went public in a George Soros-backed IPO.
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