Letters: The MFI puzzle

This refers to the news report “MFI activities in AP come to a halt” (October 21). Assuming a microfinance institution (MFI) funding of about Rs 10,000 crore is outstanding in Andhra Pradesh, the reported non-recovery of Rs 1650 crore — Rs 250 crore reported by members of the Micro Finance Institutions Network and Rs 1,400 crore claimed by SKS Microfinance during the week — works out to 16.5 per cent of the outstanding MFI credit in the state. Given the high interest rates charged by MFIs, if, say, Rs 150 crore out of this accounts for interest, the gross credit of Rs 10,000 crore was to be recovered in less than seven weeks. This points to the nature of MFIs’ clientele and activities and there is a need to resolve the issue fast.

M G Warrier, Mumbai