Friday, March 14, 2008

Predatory Lending in India?

I am currently in Hyderabad, visiting for a few weeks at the India School of Business. This morning's newspaper contained an item about how farmers in India obtained mortgages with very high interest rates, fell behind in their payments, and ultimately lost their properties to lenders.

The government of Maharashtra (the state that includes Mumbai) is contemplating legislation that would require the lenders to return title to the borrowers. The sentiment is understandable, but could undermine the ability of India to develop its fledgling mortgage market. The dilemma is depressingly familiar.

2 comments:

Anonymous said...

These rates are going to be proven to be very bad for the farmers as these high rates will not allow them to go through the investment till the bank reduces the prices for the mortgages. but this may make problem for banks as well as happened in USA as Adjusted rates was launched.

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