Over the past few years microfinance in India has morphed rapidly from a charitable endeavour to a profitable business and then to flavour of the month for private equity investors and venture capitalists.

It was a startling transformation for a sector that until recently was considered a non-profit business. High repayment rates of about 98 per cent and a vast pool of “unbanked” Indian customers who need small loans woke banks and investors to the serious business potential of the sector.