What Economic Activities taken up with Microfinance loans can yield returns greater than 25% which is the usual cost of a micro loan in India?
Extremely high rate, in some countries this would be illegal (considered usury extended by loan sharks). It makes the real cost of finance in India for small businesses v. high (nominal interest rate minus inflation)
I agree with previous comments, such extreme loans conditions are not common in most countries and may even be illegal, most types of economic activities (moreover for micro activities) cannot be expected to definitely earn such high returns
Thanks for your responses David Homola Manhal Shotar Jan H Jansen
What is the explanation of more than 20% difference between this rate and the rate of rbi of about 4%?
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