The Microfinance Contagion Scenario
Harvard Business Review
JUNE 10, 2011
The average debt-to-equity ratio of the 10 largest MFIs in India is 7.06 , indicating an average 12% equity cushion. In other words, at current repayments rates, any MFI with more than 12% of its portfolio in AP is at risk of insolvency. At the prevailing ratios, management failed to act prudentially.
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