Rahul Gandhi charged with favouring microcredit system
New Delhi (AsiaNews) - While discussions are still ongoing on how to regulate microfinance (MFI), a controversy has exploded. Last week, N Chandrababu Naidu, Telugu Desam Party president (TDP), and Mageshwara Rao, TDP leader in the Lok Sabha (parliament) accused the government of not intervening in a timely manner to regulate MFIs.
Nageshwara Rao has even indicated that Rahul Gandhi, leader of the Congress Party, facilitated the development of the MFI, in favour of SKS finance company, and challenged him to a public debate.
Small claims MFI loans are granted to people without collateral usually required by lenders (such as real estate and fixed income), but who are known to the lender as trustworthy. MFIs should fund private business initiatives, allowing the customers the economic resources necessary to set up an activity, the proceeds of which make it possible to repay the funds.
But in India there was a wide spread granting of loans for expenses such as weddings, funerals, or simply buying of consumer goods. Many customers are not able to repay the sum and the media have reported that dozens of them have been "incited" to commit suicide by donors, who had previously made them take out an insurance policy that provided for repayment of the loan in case of death. Bulliyya is the coordinator for 80 villages in Andhra Pradesh's "Laya Project", developed in Addateegala, East Godavari. He has worked for 22 years in the area and told AsiaNews that "these Mfi have made tribals even poorer. We have witnessed suicide attempts, because of the MFI”.
"The Act for the control of a financial loan - he explains - exclude loans in the tribal area. These MFIs use subtle ways to work this area, through support groups, or even offer them in an unlawful manner. " The penetration of these microcredit is such that "it is estimated that about 90% of households in tribal adivasi [area] is dependent on non-formal sources of credit."
"The lack of institutional arrangements for income generating activities – he continues - has compounded the problem." "The ease of microloans, along with small repayments provided on a weekly basis, has led the poor to take these MFIs. The high rate of interest is masked, but our poor have understood this too late. " "Officers of microcredit are also known to use harsh tactics to obtain repayment of the loans," so that "some of these poor people have attempted suicide."
In East Godavari district press have reported seven suicides since November 2009 for failing to repay MFIs. A vicious circle, where people often get a loan and then turn to another institution for a new loan to pay off first. Among the costs for financing are usually covered 350 rupees for the insurance that indemnifies the lender in case of death of the client.
.png)
08/06/2017 16:19
