DHAKA — Bangladeshi microfinance pioneer Muhammad Yunus on Sunday attacked companies for "misusing and abusing" his original concept of helping poor people via small loans, after a backlash against profit-making lenders.
Yunus admitted the reputation of micro-credit had been tarnished due to Indian commercial companies that charge high interest rates and use allegedly heavy-handed tactics to collect repayments.
India's biggest lender to the poor, SKS Microfinance, has been in the spotlight following a series of suicides among debt-laden villagers in Andhra Pradesh state, where authorities have reacted by ordering a crackdown on microfinanciers.
"A lot of people are misusing and abusing the concept and use it as vehicle to make money. And SKS is a big example in this regard," Yunus told reporters in Dhaka, the Bangladeshi capital.
He said SKS boss Vikram Akula had set up a non-governmental organisation and transformed it into a profit-making company which he then launched on the Mumbai stock exchange.
"It's a complete detour and nothing but a quitting of the (microfinance) mission," said Yunus, who won the Nobel Peace Prize in 2006 for his Grameen Bank's microfinance work.
"The original micro-credit concept cannot be blamed for their faults," he added.
The microfinance industry in India, once seen as a saviour of the poor, is in crisis after criticism of the alleged abusive practices by debt collectors and high interest rates.
Some 17 of the suicide victims were SKS borrowers, but the company has strongly denied its actions led to their deaths.
Yunus also said he was pleased the Norwegian government had cleared him of embezzlement allegations raised in a recent television documentary.
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