Countries & Regions

The loan crisis in Andra Pradesh (AP) has dominated the Indian microfinance market through fiscal year 2010.  The crisis started late in 2010 with reports of MFI loan officers harassing borrowers to repay loans and culminated with an AP state ordinance effectively halting loan repayments in India’s largest microfinance market.  Details of how the crisis has impacted the overall market after years of strong growth can be found throughout the India Country Briefing:

• Overview: In-depth analysis of the events of the AP Crisis and the Malegam Committee tasked with defining a national microfinance law as well as links and synopses on key actors and legislation.
• Supply & Demand: Heavy geographic and loan product concentrations amplified the losses in MFI loan portfolios throughout the AP Crisis.
• Funding: Equity and debt financing had been very favorable to MFIs over the past few years, but the situation changed dramatically as funding has dried up since the start of the Crisis in Andhra Pradesh.
• Performance: PAR > 30 days has reached an all-time high. Despite accusations that MFIs are taking advantage of their borrowers, analysis shows that the profits of Indian MFIs are lower than global averages. 
• Quarterly Update: State-level breakouts of loan portfolios across the country show the continuing impact of the crisis and the extent that the crisis has spread out of AP.  Despite the alarming data, analysis from the MIX Barometer of Indian MFIs’ forecasts indicates that they expect that the market should start to improve.

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