The Microfinance Contagion Scenario
Harvard Business Review
JUNE 10, 2011
A large exposure to AP with its abysmal repayment rates is an existential crisis for MFIs in India. Losses in AP will overwhelm many institutions' equity cushion. The average debt-to-equity ratio of the 10 largest MFIs in India is 7.06 , indicating an average 12% equity cushion.