The Big Trouble In Small Loans

As large banks pile into microfinance, will profits get ahead of people?

Zackary Canepari for TIME

SKS head Vikram Akula, in a rice field his firm helped to fund.

Rafael Llosa's company has been lending money to some of the poorest people in Peru for 30 years. It used to be a fairly lonely endeavor. Giving tiny loans to impoverished women to make ceramics or to farmers to buy milk cows was hardly seen as a great business.

Except that it was.

In 1998 the organization Llosa runs, now called Mibanco, converted from a nonprofit into a bank, demonstrating what other microfinance institutions around the world knew too: that the poor are good risks who repay loans on time; get enough of them together, you can not only chip away...

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