Interesting article in the Globe and Mail. When the shift started from non-profits offering microfinance lending and financial education to private companies and eventually public companies ($350 million IPO in India for SKS Microfinance), the social safety net that assured repayment of the loan is gone. Now collection companies are forcing people into an untenable position of paying back loans even before they have defaulted on them. In some cases, to boost sales the microfinance companies convinced borrowers to take out multiple loans. These are people who live on less than $2 a day, who are often times uneducated, and are looking for any way to get out of poverty.
It will be interesting to see what financial reforms the Indian government brings out in light of the recent spat of suicides, if anything at all.