(wl-3993)-Where medicine is poison: Anatomy of Recurring Crises in Inclusive Finance

Every few years the commercial inclusive finance sector goes through a crisis with the similar issues of excessive lending, coercive recovery practices and high interest rates cropping up. In this paper we examine why this tends to happen both from the perspective of the design of the product and the vulnerability the emanates from the ecosystem. We identify four sources from where the stress to the inclusive lending model could come from and conclude with possible actions. In the process the paper also examines the regulatory approach of the central banks and the State and the circumstances where there could be a regulatory laxity.