MICROCAPITAL BRIEF: 76 Criminal Cases Pending Over Alleged Role of Microlenders in Borrower Suicides in India’s Andhra Pradesh

In India’s Andhra Pradesh state, the government is pushing ahead with 76 criminal cases against employees of Indian microlenders, accusing them of pushing poor debt-ridden residents to suicide.

As reported by MicroCapital on February 27, evidence has surfaced that implicates microfinance institutions in these suicides. Glocal Research and Consultancy Services, a for-profit firm in Hyderabad, was commissioned to examine the role of microfinance companies in 44 deaths and reported that in 13 cases there was evidence of a link between the actions of microfinance employees and the borrower’s suicide or attempted suicide. He implicates Indian microlenders — SKS Microfinance, Share Microfinance and Spandana Sphoorty Financial — in the majority of those cases. The companies deny any responsibility for these suicides.

By Natalie Baer, Research Associate

About SKS Microfinance: SKS Microfinance is a microfinance institution (MFI) that was launched in 1998. It delivers microfinance products through a group-lending model to impoverished women in India as a for-profit, non-banking finance company. SKS converted into a public limited company in May 2009 and launched an initial public offering on July 28, 2010. Its equity investors include Quantum Hedge Fund, Sequoia Capital, Vinod Khosla, Small Industries Development Bank of India, Bajaj Allianz, Yatish Trading, Kismet Capital, Sandstone Capital, Silicon Valley Bank and Unitus. SKS currently trades on the Bombay Stock Exchange. According to 2010 data from the US-based nonprofit data provider Microfinance Information Exchange (MIX), SKS Microfinance holds total assets of USD 1.2 billion, a gross loan portfolio of USD 1.2 billion, approximately 6.6 million borrowers, return on assets (ROA) of 6.3 percent and return on equity (ROE) of 22.4 percent.

About Share Microfin Limited: Share Microfin Limited is a microfinance institution (MFI) based in Hyderabad, India. After beginning operations in 1989 as a nonprofit, Share was converted into a non-bank financial institution (NBFI) in 2000. It offers loans—primarily to women—as well as training and consulting to microentrepreneurs. As of March 31, 2011, Share reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 553 million, a gross loan portfolio of USD 465 million, return on assets (ROA) of 0.33 percent, return on equity (ROE) of 2.4 percent and 2.84 million borrowers.

About Spandana Sphoorty Financial Limited: Spandana Sphoorty Financial Limited provides microcredit and “credit-plus” services to low-income households in India. The company was founded by Padmaja Reddy in 1998 and receives its funding from development finance institutions and banks. As of March 31, 2010, Spandana reported to the US-based nonprofit Microfinance Information Exchange (MIX) a gross loan portfolio of USD 779 million, return on assets (ROA) of 8.99 percent, return on equity (ROE) of 55.7 percent and approximately 3.66 million active borrowers.

Sources and Additional Resources:

India state gov’t pushes microfinance prosecutions
http://www.google.com/hostednews/ap/article/ALeqM5i_3SLgyYx_-uJImhCjyWri0Tuu2Q?docId=fc9baa6e4f414c89a2e530cc9677810d

MicroCapital story, February 27, 2012, “MICROCAPITAL BRIEF: Internal Documents Collected by Associated Press Implicate SKS Microfinance Staff in Borrower Suicides in Andhra Pradesh, India”
https://www.microcapital.org/microcapital-brief-internal-documents-collected-by-associated-press-implicate-sks-microfinance-staff-in-borrower-suicides-in-andhra-pradesh-india/

MicroCapital Universe Profile: SKS Microfinance https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SKS+Microfinance

MicroCapital Universe Profile: Share Microfin Limited https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SHARE+Microfin+Limited

MicroCapital Universe Profile: Spandana Sphoorty Financial Limited
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Spandana+Sphoorty+Financial+Ltd

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