Financing is the worst business as people want high interest for their deposit while they want lowest interest possible when they take finance, as financing is not a product margins are very thin while margin of safety is very bad. If one notice Indian PSU banks where trading below 10P/E for very long time. While SKSMICROFIN is quoting @ 34P/E and if government is cracking then Growth is hard to come*. Take informed decision *
------Just news link---- The Andhra Pradesh government has appealed to the bankers to extend revolving cash credit to the poor women in a bid to prevent them from seeking loans from microfinance institutions (MFIs). MFIs have been in the news over the recent months allegedly for driving a huge number of their loan-seekers to suicides. Strong arm tactics have led to violence and in an incident yesterday, a girl committed suicide after being beaten by four loan recovery agents who were hunting for her mother. http://www.financialexpress.com/news/women-to-flee-microfinance-institutions/702258/ http://blogs.wsj.com/indiarealtime/2010/10/25/indias-microlenders-still-struggling/ India’s microlenders this week are anxious to see whether they will actually be allowed to start distributing and collecting payments for the tiny loans they make to poor borrowers. [image: http://online.wsj.com/media/SKS_D_20101025023602.jpg] Bloomberg News A woman signs a register to receive a loan by SKS Microfinance last August. After a wave of suicide by borrowers, India’s Andhra Pradesh state has since introduced restrictions on the industry. Early reports from the field Monday suggested they were still sometimes being blocked from doing business in the state of Andhra Pradesh. They were effectively blocked from managing their loans to millions of borrowers in the southern state after it introduced new restrictions on the industry in response to a spate of more than 30 suicides by borrowers. A state court has put the implementation of the new rules<http://online.wsj.com/article/SB10001424052748704779704575553853783796316.html>on hold as it waits to hear from the microfinance institutions who say they need time to comply with the rules and that the state is not allowed to impose new rules on them as they are regulated by the Reserve Bank of India. *More than 20 employees of microfinance companies, including SKS Microfinance Ltd. and Spandana Sphoorty Financial Ltd. have been arrested<http://online.wsj.com/article/SB10001424052702304354104575568242420582542.html>for violating the rules which are aimed at protecting borrowers from being overwhelmed by microdebt and harassed by collection agents.* Microlenders say in some areas the police have been very heavy-handed in defending borrowers, even arresting agents for calling borrowing groups on the phone to explain why they weren’t showing up for regular village meetings for collection. Lenders are concerned that even with a court order that allows them to get back to work they will continue to be blocked this week by police officers who think they are protecting the poor. To calm concerns that the microlending boom in the state has led to over indebtedness, the members of a group of the top microlenders has offered to cap their interest rates at 24% and create a fund that will help reschedule the loans of borrowers who are struggling. They say they are also are willing to accept more rules and regulations. However, too much restriction and government control of the sector could be counter productive. One of the reasons the microlending industry has done so well is that government programs and government banks have failed miserably for decades at reaching out to the poor. New Delhi and the Reserve Bank of India see financial inclusion as a pillar of plans to spread prosperity to more of India’s population of more than one billion. They understand they need microfinance institutions to help push the benefits of the country’s economic success further down the economic ladder. Still, as politicians, bureaucrats and the local media focus their attention and anger on the sector, the companies that use unethical collection practices and those that have piled too much debt on their borrowers may not make it through this perfect storm. -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en.
<<image001.jpg>>
