Indian Development Blog discusses a recent WSJ article A Global Surge in Tiny Loans Spurs Credit Bubble in a Slum in Micro Credit Bubble? :
"Although it can be argued that the WSJ piece is not very well-researched and has instances of generalization and poor attribution, it is interesting to see that MFIs choose to underplay the mass-default that has occurred in Karnataka and dismiss the possibility that it could be partly due to faulty operational models."
I have been involved in one small project for a couple of years and so far there are no defaults. We work through a local pastor who knows the people, their needs and capabilities and has some standing in the community. Because, there are no defaults, the interest rate is low and sometimes used to finance other loans. Now it has reached two other places, in one of them through a local union. Such models may work on a small scale.