Banks have been taking profits from developing World loans
Banks blasted for ‘profiteering from developing world loans’
Some of the world’s major banks have been accused of making excessive profits from loans to businesses in the developing world in a devastating expose of the micro-finance sector.
By Louise Armitstead
9:48PM BST 30 Jun 2012
A book due to be published this week claims that banks, including Deutsche, Citigroup and Standard Chartered, are placing cash into funds that make millions from charging up to 200pc interest on small loans.
Hugh Sinclair, the author of Confessions of a Microfinance Heretic, has called for a full investigation into the sector.
The former investment banker claims that microfinance, an industry with a grand vision of erasing global poverty, has been “hijacked by profiteers”. He said the problem was “neither that the entire microfinance sector is evil, nor that the basic model is fatally flawed”, but that large parts of the sector were able to ignore the impact they had on poverty reduction.
He wrote: “The ultimate investors are not in practice protected by any meaningful regulation, have a limited idea of what their funds are being used for and rely entirely on the funds to reassure them.”
Some of the banks involved admitted that work was under way to improve transparency.
A spokesman for Standard Chartered said it had added social performance measures to its due diligence process following a review.
Deutsche Bank declined to comment.
Citigroup did not return calls for comment.