India microlenders face heat over rates

NEW DELHI — India's biggest lender to the poor, SKS Microfinance, was the toast of investors when it staged a hugely successful public share offer three months ago.Now SKS, India's only listed microfinancier, faces an unwelcome spotlight as it and other small-scale lenders come under scrutiny over high interest rates, allegations of strong-arm debt collection tactics and a rash of suicides.Last Friday, police in Andhra Pradesh arrested several debt collectors for SKS and Spandana Spoohrty Financial, India's second-largest microlender, after a borrower alleged she was harassed over two loans totalling 1,300 dollars.The police action followed more than 30 suicides in Andhra Pradesh blamed by politicians on aggressive debt recovery agents operating in the southern state, where many of India's biggest microfinance institutions are based.After news of the suicides surfaced in mid-October, SKS said that 17 of the dead were among its borrowers, but rejected responsibility for the deaths."Suicides are unfortunate but there might be reasons other than our loans," SKS chairman and founder Vikram Akula said."One thing we are sure about is that our ethical way of doing microfinance has not caused these tragedies."Both SKS and Spandana have denied using coercion to get back loans.Shares in SKS -- which has also made headlines over the abrupt firing of its chief executive early this month due to "interpersonal differences" -- have slumped by around a quarter as the company has been roiled by controversy.The mushrooming microfinance sector has been hailed as a saviour of India's poor for providing loans averaging 250 dollars to millions of borrowers -- often small entrepreneurs -- unable to get credit from mainstream banks.But the microfinanciers' strongly growing profits, accusations of coercion and interest charges of up to 36 percent have put them under the scanner, with critics saying they risk turning into despised moneylenders."Microcredit was designed to serve poor people -- to help them overcome poverty. We had

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