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The Microfinance Contagion Scenario

Harvard Business Review

So far, the Andhra Pradesh (AP) microfinance crisis has largely been viewed as a local issue, with relatively little impact beyond AP or India's borders. But as information trickles out about how bad the repayment situation in AP is, a plausible global contagion scenario is emerging. A large exposure to AP with its abysmal repayment rates is an existential crisis for MFIs in India.