Preparing for Failure: Strategies for Challenging Times

MicrofinanceFocus, 8 November 2010

The crisis in Andhra Pradesh has highlighted how exposed MFIs are to mass non-payments.  Industry insiders have suggested that even some of the largest MFIs simply might not survive if the crisis is not resolved soon.  And if that were to happen, is the industry prepared to deal with the process of unwinding one of these giants?

The top MFIs in India are large by any standard, with assets in the multiple $100s of millions, most of which are held in the form of outstanding microcredits.  Once an MFI is hobbled to the point that it cannot survive as a going concern, what happens to these assets?  Experience from other MFIs suggests that prospects for recouping them are not good. more →