Arunachalam: MFIs engaged in multiple lending for consumption purposes and often granted loans without assessing the loan absorption capacity of the clients. Implied in this statement is the fact that MFIs have pushed loans indiscriminately to low-income clients for consumption purposes without any sensitivity to their debt servicing ability, tried to grow very fast in this manner, and therefore to make unnatural profits. It seems more and more clear that MFIs grew to attract capital at high valuations and, thereafter, had to justify these high valuations by providing better returns to investors. Investors likewise, as they had paid huge premiums, wanted to recover their investment fast and hence, were perhaps pushing the MFIs to grow faster. Banks and policy-makers also joined the bandwagon, causing much euphoria about financial inclusion that also resulted in unsound burgeoning growth. State governments, on their part, took some very rigid stands as well, including delivery of hugely subsidized credit. All of the above created the 2010 Indian Microfinance crisis in my opinion.