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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. A large exposure to AP with its abysmal repayment rates is an existential crisis for MFIs in India. In other words, at current repayments rates, any MFI with more than 12% of its portfolio in AP is at risk of insolvency.