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David Roodman's Microfinance Open Book Blog

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Beth Rhyne compares today's crisis in Andhra Pradesh to that of Bolivia in 1999--2000.

Things worked out well in Bolivia.

But:

There is one enormous difference that makes a positive outcome in Hyderabad much less likely than it was in La Paz. In the Bolivian crisis, the protesters came from outside the government, and the government worked closely with the industry to reach a resolution. In Hyderabad, the opposition to microfinance comes from inside the government, specifically, the government of the state of Andhra Pradesh, making it much harder for the regulatory authorities (the Reserve Bank of India) to negotiate a relatively apolitical solution. In the past, the Reserve Bank of India has, like the banking authorities in Bolivia, recognized the importance of microfinance institutions in bringing financial services to low income people. But its voice is not the only powerful determinant of the way forward.

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