At a time when the Micro-finance Institutes (MFIs) are charging anything between 24 to 36 per cent (and sometimes more) as the annual rate of interest, Madhya Pradesh government's decision to provide farmers with loans at one per cent interest from the cooperative banks from the next financial year, comes as a big sigh of relief. And as Chief Minister Shivraj Singh Chauhan claimed MP is the first State to lower the interest rate to as low as one percent.
Karnataka is also planning to lower interest rate for farmers to one percent. PTI reports: "The government intends to examine the feasibility of extending farm loans under the cooperative sector at a lower interest rate of one percent," Governor H R Bhardwaj said in his address to the winter session of the State assembly. Karnataka is at present extending term loans to farmers, weavers and fishermen at three percent interest rate through cooperative credit societies.
Over the years, India has systematically reduced the interest rate for farmers. As former Finance Minister P Chidambaram had said sometimes back: "10 percent interest was charged for farm loan when the UPA government assumed office in its first term (in 2004)". When he was the Finance Minister it was reduced to 7 percent gradually. Subsequently, farmers could get 2 percent subsidy out of 7 percent interest on farm loan if they repay the loan without default, which means for all practical purposes the effective rate of interest came down to five per cent.
The catch here is that while the nationalised banks provide crop loans at 7 per cent (subsidised to 5 per cent if repayed in time), it is through the cooperative banks that the State governments have managed to extend loans at a much lower rate of interest. This is certainly laudable, and I hope in 2011 Finance Minister Pranab Mukherjee directs nationalised banks to further lower the rate of interest to 3 per cent (if not one per cent).
Although the Government had fixed a target to extend agricultural loan to the tune of Rs.3.75 lakh crore in 2010-11, much of this loan is actually going to agribusiness,warehousing and related activities. Farmers are still in the lurch, largely depending upon the money lenders.
This makes me wonder that if farmers can be provided with loans at such a low rate of interest why is that we need to encourage the new organised breed of money-lenders, and I am talking of the MFIs, be allowed to charge an exorbitantly high interest ranging between 24 to 36 per cent from the poorest of the poor in the same village? Why is that while the farmer gets crop loan from cooperative banks at one per cent, his wife if she happens to be a member of a self-help group or for that matter a farm worker who also works on the same farm, be obliged to take loan from an MFI?
Why can't the government extend credit to small borrowers also at the same rate of interest as the farmers? If the farmers can avail of the Kisan Credit Card, why can't the artisans, weavers, fishermen, and agricultural workers too get similar cards?
This brings me to what Muhammed Yunus writes in New York Times (Jan 14, 2011) "Sacrificing Microcredit for Megaprofits" (here is the link: www.nytimes.com/2011/01/15/opinion/15yunus.html?partner=rss&emc=rss): "The maximum interest rate should not exceed the cost of the fund — meaning the cost that is incurred by the bank to procure the money to lend — plus 15 percent of the fund. That 15 percent goes to cover operational costs and contribute to profit. In the case of Grameen Bank, the cost of fund is 10 percent. So, the maximum interest rate could be 25 percent. However, we charge 20 percent to the borrowers. The ideal “spread” between the cost of the fund and the lending rate should be close to 10 percent.
Yunus admits that he is also charging an interest of 20 per cent from the small borrowers. Agreeing that strict regulations should help in enforcing discipline, he says: "To enforce such a cap, every country where microloans are made needs a microcredit regulatory authority. Bangladesh, which has the most microcredit borrowers per square mile in the world, has had such an authority for several years, and it is devoted to ensuring transparency in lending and prevented excessive interest rates and collection practices. In the future, it may be able to accredit microfinance banks. India, with its burgeoning microcredit sector, is most in need of a similar agency."
I am afraid I do not buy the argument forwarded by Yunus. Although he blames the recent crisis that erupted in India and Latin America as the cause behind the mistrust in MFIs when he writes: "Troubles with microcredit began around 2005, when many lenders started looking for ways to make a profit on the loans by shifting from their status as nonprofit organizations to commercial enterprises. In 2007, Compartamos, a Mexican bank, became Latin America’s first microcredit bank to go public. And this past August, SKS Microfinance, the largest bank of its kind in India, raised $358 million in an initial public offering," I think he is very cleverly trying to deflect attention from the real cause.
Yunus writes: "In 1983, I founded Grameen Bank to provide small loans that people, especially poor women, could use to bring themselves out of poverty. At that time, I never imagined that one day microcredit would give rise to its own breed of loan sharks." Well, the problem actually began in 1983. Yunus did exactly what the loan sharks are doing now. The only difference being that while the loan sharks are charging 24 to 36 per cent and above (some even charging 100 per cent and still cite several case studies where poor have gained), Yunus was charging a little less.
If only people like Yunus (and those who swear in the name of the poor, and have in turn built Empires) forced the governments to provide cheaper credit to small borrowers like what is being made available to farmers I am sure a large population of the poor would have been above the poverty line by now. That is why I am convinced that MFIs are basically a crime against humanity. Tough legislation is not the answer to stem the rot. These MFIs need to be shut down, and several of those whom Yunus refers to as 'loan sharks' need to be put behind bars.
The poorest of the poor also need to be provided with cooperative loans, and Kisan Credit Cards like the farmers get. If such schemes can be implemented for farnmers who live in unreachable areas, I am sure the same provisions can be extended to other members of his family. What is needed is a political will to make this happen, and it will happen.
Till then , MFIs will continue to loot the poor.
Showing posts with label micro finance. Show all posts
Showing posts with label micro finance. Show all posts
MFIs: Profiteering from poverty
Some days back, the New York Times had in a report Indian Microcredit Faces Collapse From Defaults (Nov 17, 2010) stated: "But microfinance in pursuit of profits has led some microcredit companies around the world to extend loans to poor villagers at exorbitant interest rates and without enough regard for their ability to repay. Some companies have more than doubled their revenues annually.
Now some Indian officials fear that microfinance could become India’s version of the United States’ subprime mortgage debacle, in which the seemingly noble idea of extending home ownership to low-income households threatened to collapse the global banking system because of a reckless, grow-at-any-cost strategy."
The NYT had blamed the borrowers in one of India’s largest states for the collapse. Accordingly, they have stopped repaying their loans, egged on by politicians who accuse the industry of earning outsize profits on the backs of the poor. If this is true, I am very happy.
MFIs deserve to be kicked out, the sooner the better for the poor.
Dainik Jagran, the largest selling newspaper in India (it is in Hindi), has carried today (Nov 27, 2010) an interesting report that should serve as an eye-opener. It says that the Ministry of Finance had a couple of days back held a discussion on microcredit in which a document detailing the profits earned by the MFIs was placed before the members. The details are shocking, and show how the MFIs have been extracting their pound of flesh in the name of poverty eradication.
An analysis of 13 major non-banking MFIs shows that the profits these firms accumulated by charging exorbitant interest from the poor borrowers had swelled from Rs 677.3 crore in 2007-08 to Rs 3776.93 crore in 2009-10. In other words, their profits had multiplied by 5.5 times over a period of two years. Since the MFIs have failed to expand the borrower base, it is quite evident that the profit increase is based on the interest amount they have managed to garner.
So while the poor took the fatal route to escape the humiliation that comes with coercive recovery of outstanding loans, the MFIs have made it rich. Bandhan Microfinance has broken all records. Its profits swelled by 34 times in two years. Some of the other players -- SKS Microfinance, Ujjivan Microfinance, BSS Microfinance, Share Microfinance, Sampada Safurti, and Grameen Financial -- have also managed to collect huge profits. Further investigations are on.
MFIs Interest Profit (in crore rupees)
2007-08 2009-10
SKS Microfinance 170.1 958.92
Bandhan 6.56 222.11
BSS 7.03 155.38
Share Microfinance 113.08 475.27
Grameen FS 82.65 327.35
Samdana Safurti 127.45 724.09
Ujjivan 36.37 372.89
(Note: Rs 1 crore=Rs 10 million)
The above chart is self-explanatory. It tells us how lucrative is the microfinance business. If you are foreign educated, and have lost your job in the wake of US recession, it is time to head home and set up an MFI. You can make money from the laudable objective of helping the poor. Many of the stalwarts in the MFI business have done it like this.
And don't worry, you will have a huge support from an equally indifferent educated from the middle class who would call it a 'win-win' situation. Many iNGOs, who also thrive on lending for the poor, would back you up to the hilt. Mainline economists are always there to justify such financial crimes.
You make your profits by sucking the blood of the poor. The resulting social cost would be picked up by the poor.
Now some Indian officials fear that microfinance could become India’s version of the United States’ subprime mortgage debacle, in which the seemingly noble idea of extending home ownership to low-income households threatened to collapse the global banking system because of a reckless, grow-at-any-cost strategy."
The NYT had blamed the borrowers in one of India’s largest states for the collapse. Accordingly, they have stopped repaying their loans, egged on by politicians who accuse the industry of earning outsize profits on the backs of the poor. If this is true, I am very happy.
MFIs deserve to be kicked out, the sooner the better for the poor.
Dainik Jagran, the largest selling newspaper in India (it is in Hindi), has carried today (Nov 27, 2010) an interesting report that should serve as an eye-opener. It says that the Ministry of Finance had a couple of days back held a discussion on microcredit in which a document detailing the profits earned by the MFIs was placed before the members. The details are shocking, and show how the MFIs have been extracting their pound of flesh in the name of poverty eradication.
An analysis of 13 major non-banking MFIs shows that the profits these firms accumulated by charging exorbitant interest from the poor borrowers had swelled from Rs 677.3 crore in 2007-08 to Rs 3776.93 crore in 2009-10. In other words, their profits had multiplied by 5.5 times over a period of two years. Since the MFIs have failed to expand the borrower base, it is quite evident that the profit increase is based on the interest amount they have managed to garner.
So while the poor took the fatal route to escape the humiliation that comes with coercive recovery of outstanding loans, the MFIs have made it rich. Bandhan Microfinance has broken all records. Its profits swelled by 34 times in two years. Some of the other players -- SKS Microfinance, Ujjivan Microfinance, BSS Microfinance, Share Microfinance, Sampada Safurti, and Grameen Financial -- have also managed to collect huge profits. Further investigations are on.
MFIs Interest Profit (in crore rupees)
2007-08 2009-10
SKS Microfinance 170.1 958.92
Bandhan 6.56 222.11
BSS 7.03 155.38
Share Microfinance 113.08 475.27
Grameen FS 82.65 327.35
Samdana Safurti 127.45 724.09
Ujjivan 36.37 372.89
(Note: Rs 1 crore=Rs 10 million)
The above chart is self-explanatory. It tells us how lucrative is the microfinance business. If you are foreign educated, and have lost your job in the wake of US recession, it is time to head home and set up an MFI. You can make money from the laudable objective of helping the poor. Many of the stalwarts in the MFI business have done it like this.
And don't worry, you will have a huge support from an equally indifferent educated from the middle class who would call it a 'win-win' situation. Many iNGOs, who also thrive on lending for the poor, would back you up to the hilt. Mainline economists are always there to justify such financial crimes.
You make your profits by sucking the blood of the poor. The resulting social cost would be picked up by the poor.
Small borrowers must stop repaying the loans from MFIs. This is the only way to curb the social evil
Yesterday, when the Reserve Bank of India (RBI) announced the credit policy review in Mumbai, I was discussing the implications on a national TV. Within minutes of the announcement of the upward revision in repo and reverse repo rates -- sixth time this year -- I found that the media focus had shifted to the tightening of the home loans. It was then that I asked a question as to why the RBI had refrained from tightening the screws on the micro-finance segment.
For some strange coincidence, the UPA President Sonia Gandhi who was addressing the All India Congress Committee (Rajdeep Sardesai of CNN-IBN later in show extended the acronymn AICC to 'All India Crooks Corner') at the same time, also skipped talking about rampant corruption within the party. Is it merely a coincidence or a pointer to the evil that the Congress party as well as the RBI is finding it too hot to handle?
I thought my poser on the TV show had gone unnoticed. But I was pleasantly surprised when I found George Mathew of the Indian Express (Nov 3, 20101) asking the same question to the RBI governor D Subbarao. He asked: Microfinance companies are charging very high interest rates. Why is the RBI not doing anything to bring them down?
Subbarao replied: "The RBI regulates only one segment of the MFI sector, which is the non-banking finance companies involved in the microfinance sector. There’s no such separate categorisation of NBFC-MFIs. There are 37 NBFCs which are MFIs and regulated by us and none of them are deposit taking. Only about 13 out of 37 NBFCs are systematically important with business of over Rs 100 crore. The segment of the MFI sector that comes under RBI regulation is small but in terms of total lending, it might be significantly higher. Now there are questions about regulating interest rates and our stance is to move away from regulating interest rates. We can’t now turn towards this and start regulating interest rates. In any case, this is a question that Malegam committee will go through and we will take a view after the report is available."
While this may be partly true, I think the RBI (like the Congress party) is trying to turn a blind eye to the gory ongoings in the MFI sector. How can the RBI governor first express helplessness, and then say that 'in any case, this is a question that Malegam committee will go through and we will take a view after the report is available." Does it mean that Malegam committee will give additional regulatory powers to RBI? The answer is No. The RBI is simply trying to avoid taking a harsh decision lest it reflects on the lending rates of the nationalised banks (which provides refinance to MFIs and others).
Only a few days back, the Sunday Indian Express (Oct 24, 2010) had in a full-page article entitled Andhra's Small-Debt Trap (Read the full report at: http://www.expressindia.com/latest-news/Andhras-smalldebt-trap/701577/) written by Sreenivas Janayala clearly brought out the malaise that afflicts the micro-finance sector. It quoted R Subramaniam, Principal Secretary, Rural Development, Andhra Pradesh, as saying: “But it is the fine print in the clauses and loan agreement that really create the debt trap. When borrowers fail to pay one EMI, the additional interest is calculated at double or triple the interest rate. The interest continues to remain the same until the principal amount is paid off. More often than not, the final interest rate works to nearly 50 per cent.”
Now please tell me, isn't this shameful? Does it make the MFIs any different from the moneylenders that they depict as the villain of the story?
On Oct 16, the Andhra Pradesh government, for the first time in the history of India, promulgated an ordinance, restraining the MFIs from using coercive tactics to recover loans and weekly interest, and keep lending rates in check. This is only one part of the criminal activity that MFIs indulge in. In my understanding, as numerous reports/studies have shown, the main problem is the high interest rate that is being charged from the small borrowers. The AP government as well as the RBI is silent on this. The conspiracy of silence is taking a human toll.
The answer lies in what I had first suggested some days ago on this blog. I had asked small borrowers (including the SHGs) to stop paying back the loans. I am glad the former chief minister Chandrababu Naidu, who is on a three day visit to Ranga Reddy district, also asked "women who have taken loans not to repay till interest rates are reduced."
In a democracy, people must raise their voice. They must express their anger in a peaceful way so that the powers that be sit back and take notice. MFIs charge such exorbitant interests because the nation does not care nor is it aware. The MFIs will come under pressure only of we exert that pressure. As Rajan Alexander has in a letter to Ground Reality wrote: "And how do know they are vulnerable? Because Vijay Mahajan, the father of MFIs in India tells us so:
“We are facing collapse. Unless something changes on the ground, the industry as we know it is basically gone.”
Mahajan, we have news for you. The day when the likes of you are gone, that will be the turning point for the fight against poverty!"
For some strange coincidence, the UPA President Sonia Gandhi who was addressing the All India Congress Committee (Rajdeep Sardesai of CNN-IBN later in show extended the acronymn AICC to 'All India Crooks Corner') at the same time, also skipped talking about rampant corruption within the party. Is it merely a coincidence or a pointer to the evil that the Congress party as well as the RBI is finding it too hot to handle?
I thought my poser on the TV show had gone unnoticed. But I was pleasantly surprised when I found George Mathew of the Indian Express (Nov 3, 20101) asking the same question to the RBI governor D Subbarao. He asked: Microfinance companies are charging very high interest rates. Why is the RBI not doing anything to bring them down?
Subbarao replied: "The RBI regulates only one segment of the MFI sector, which is the non-banking finance companies involved in the microfinance sector. There’s no such separate categorisation of NBFC-MFIs. There are 37 NBFCs which are MFIs and regulated by us and none of them are deposit taking. Only about 13 out of 37 NBFCs are systematically important with business of over Rs 100 crore. The segment of the MFI sector that comes under RBI regulation is small but in terms of total lending, it might be significantly higher. Now there are questions about regulating interest rates and our stance is to move away from regulating interest rates. We can’t now turn towards this and start regulating interest rates. In any case, this is a question that Malegam committee will go through and we will take a view after the report is available."
While this may be partly true, I think the RBI (like the Congress party) is trying to turn a blind eye to the gory ongoings in the MFI sector. How can the RBI governor first express helplessness, and then say that 'in any case, this is a question that Malegam committee will go through and we will take a view after the report is available." Does it mean that Malegam committee will give additional regulatory powers to RBI? The answer is No. The RBI is simply trying to avoid taking a harsh decision lest it reflects on the lending rates of the nationalised banks (which provides refinance to MFIs and others).
Only a few days back, the Sunday Indian Express (Oct 24, 2010) had in a full-page article entitled Andhra's Small-Debt Trap (Read the full report at: http://www.expressindia.com/latest-news/Andhras-smalldebt-trap/701577/) written by Sreenivas Janayala clearly brought out the malaise that afflicts the micro-finance sector. It quoted R Subramaniam, Principal Secretary, Rural Development, Andhra Pradesh, as saying: “But it is the fine print in the clauses and loan agreement that really create the debt trap. When borrowers fail to pay one EMI, the additional interest is calculated at double or triple the interest rate. The interest continues to remain the same until the principal amount is paid off. More often than not, the final interest rate works to nearly 50 per cent.”
Now please tell me, isn't this shameful? Does it make the MFIs any different from the moneylenders that they depict as the villain of the story?
On Oct 16, the Andhra Pradesh government, for the first time in the history of India, promulgated an ordinance, restraining the MFIs from using coercive tactics to recover loans and weekly interest, and keep lending rates in check. This is only one part of the criminal activity that MFIs indulge in. In my understanding, as numerous reports/studies have shown, the main problem is the high interest rate that is being charged from the small borrowers. The AP government as well as the RBI is silent on this. The conspiracy of silence is taking a human toll.
The answer lies in what I had first suggested some days ago on this blog. I had asked small borrowers (including the SHGs) to stop paying back the loans. I am glad the former chief minister Chandrababu Naidu, who is on a three day visit to Ranga Reddy district, also asked "women who have taken loans not to repay till interest rates are reduced."
In a democracy, people must raise their voice. They must express their anger in a peaceful way so that the powers that be sit back and take notice. MFIs charge such exorbitant interests because the nation does not care nor is it aware. The MFIs will come under pressure only of we exert that pressure. As Rajan Alexander has in a letter to Ground Reality wrote: "And how do know they are vulnerable? Because Vijay Mahajan, the father of MFIs in India tells us so:
“We are facing collapse. Unless something changes on the ground, the industry as we know it is basically gone.”
Mahajan, we have news for you. The day when the likes of you are gone, that will be the turning point for the fight against poverty!"
Why is Reserve Bank of India quiet on atrocities being committed by micro-finance institutions?
The Reserve Bank of India (RBI) is hand-in-glove with some of the crooks who masquerade as saviours of the poor. I am talking of the bad guys among Micro Finance Institutions. The RBI has simply turned a blind eye to the atrocities being committed by MFI institutions. The reason is simple. MFIs helps the RBI to show the penetration of the institutional finance in the country. This is the RBI report card.
The Finance Ministry is happy. The government is happy. So why worry about millions of poor who are being tortured, raped, abused and inflicted with all kinds of atrocities in the name of loan recovery. These loan sharks move about freely, simply because they have RBI protection.
A senior journalist, Deepak Bajpai, just returned from Adilabad district in Andhra Pradesh. He visited Rojamma whose husband had recently committed suicide unable to bear the physical and mental abuse that he was being inflicted upon by the MFI agents.
He writes this moving account: usske husband bojanna ne teen hajaar rupaye (jaraa jodna toh america waasi bhaiyon kitne dollars hue) udhar liye the ek micro finance institution se kapaas ki kheti ke liye...chuka nahin paaya...toh in loan sharks ne usse harass kiya...[Her husband Bojanna had taken Rs 3,000 on loan from an MFI for cotton cultivation (just convert this into US dollars)...He couldn't pay back.....these loan sharks began harassing him]
woh aise hi karte hain...gareeb aurton ko sexually exploit karte hain....admiyon ko dhoop men ghanton khada rakhte hain aur hunter se peetate hain etc. etc. toh beete 5 nov. ko bojanna ne socha issase toh maut jyada achchhi hai...toh ussne suicide kar liya....loan sharks ke liye achchha hi hua....loan insured tha toh unhe...usske marte hi insurance company se pure paise mil gaye....jo bojanna kabhi na chuka paata. [They do it like this...they sexually exploit the poor women....the male are made to stand in sun for hours and lashed by hunters etc.....so on Nov 5 Bojanna thought it is better to die than to undergo this torture.....this was a blessing in disguise for the loan sharks.....loan sum was insured.....so the moment he died they got the refund from the insurance company.....which Bojanna wouldn't have been able to pay back]
Rajamma's plight does not end here. There was an investigation by the State authorities to find out whether the Bojanna qualified for a compensation amount of Rs 1.5 lakh which is given to those farmers who commit suicide. Look at what my friend writes:
I have an official letter with me. The subject is: "Minutes and findings of verification and certification committee conducted on the suicidal death of sri Gollamada Bojanna, resident of lokeshwaram Mandal".
toh bhai logon sarkari report kehti hai ki jaanch men paaya gaya ki bojanna kissan tha hi nahin. The private loan was taken for going to Dubai for job pupose and also he had not used the loan for agriculture purpose [The government found that Bojanna was not a farmer....the private loan was taken to go to Dubai for a job, and also the loan was not being used for agricultural purposes]
Hence this case does not come under farmer's suicidal package as per GOM no 421 dt. 1.6.2004... yeh jhooth sirf iss liye ki krishi mantri sharad pawaar ko sansad men gareebe se marne waale kissanon ki ginati padhne men hichki na aaye [This lie is being told because Agriculture Minister Sharad Pawar wants to show a low count of farmer suicides]
neeche teen saahab bahaaduron ke dastakhat hain...superintendent of police, Asstt. Director (agri.) aur Chairman and Revenue Divisional Officer. [the letter is signed by Supdt of Police, Asst Director (Agri) and Chairman and Revenue Divisional Officer]
Well, this is happening simply because we prefer not to raise our voice. We, the citizens, have always kept quiet. Why should we bother. After all, it doesn't affect us nor our near and dears. In other words, we are also part of the crime.
While the RBI is quiet, the Andhra Pradesh government is at least getting ready to stem the rot. "Rogue elements who have penetrated the microfinance sector to extract huge profits by lending to unsuspecting poor at exorbitantly high rates of interest will now find it difficult to work in Andhra Pradesh. The state government has decided to file criminal cases against microfinance institutions (MFIs) that resort to coercion and use ‘inhuman’ means to recover loans extended to the poor.
It will also invoke the provisions of the AP Money Lending Act to ensure MFIs do not fleece customers with high interest charges. “The cost of funds for most MFIs will be 9-10 per cent but they are charging ridiculously high interest rates, sometimes up to 40 per cent a year,” said R Subramanyam, principal secretary, panchayat raj and rural development department.
Read the full report AP government to discipline microfinance companies
at: http://www.d-sector.org/article-det.asp?id=1234&idFor=1234
The Finance Ministry is happy. The government is happy. So why worry about millions of poor who are being tortured, raped, abused and inflicted with all kinds of atrocities in the name of loan recovery. These loan sharks move about freely, simply because they have RBI protection.
A senior journalist, Deepak Bajpai, just returned from Adilabad district in Andhra Pradesh. He visited Rojamma whose husband had recently committed suicide unable to bear the physical and mental abuse that he was being inflicted upon by the MFI agents.
He writes this moving account: usske husband bojanna ne teen hajaar rupaye (jaraa jodna toh america waasi bhaiyon kitne dollars hue) udhar liye the ek micro finance institution se kapaas ki kheti ke liye...chuka nahin paaya...toh in loan sharks ne usse harass kiya...[Her husband Bojanna had taken Rs 3,000 on loan from an MFI for cotton cultivation (just convert this into US dollars)...He couldn't pay back.....these loan sharks began harassing him]
woh aise hi karte hain...gareeb aurton ko sexually exploit karte hain....admiyon ko dhoop men ghanton khada rakhte hain aur hunter se peetate hain etc. etc. toh beete 5 nov. ko bojanna ne socha issase toh maut jyada achchhi hai...toh ussne suicide kar liya....loan sharks ke liye achchha hi hua....loan insured tha toh unhe...usske marte hi insurance company se pure paise mil gaye....jo bojanna kabhi na chuka paata. [They do it like this...they sexually exploit the poor women....the male are made to stand in sun for hours and lashed by hunters etc.....so on Nov 5 Bojanna thought it is better to die than to undergo this torture.....this was a blessing in disguise for the loan sharks.....loan sum was insured.....so the moment he died they got the refund from the insurance company.....which Bojanna wouldn't have been able to pay back]
Rajamma's plight does not end here. There was an investigation by the State authorities to find out whether the Bojanna qualified for a compensation amount of Rs 1.5 lakh which is given to those farmers who commit suicide. Look at what my friend writes:
I have an official letter with me. The subject is: "Minutes and findings of verification and certification committee conducted on the suicidal death of sri Gollamada Bojanna, resident of lokeshwaram Mandal".
toh bhai logon sarkari report kehti hai ki jaanch men paaya gaya ki bojanna kissan tha hi nahin. The private loan was taken for going to Dubai for job pupose and also he had not used the loan for agriculture purpose [The government found that Bojanna was not a farmer....the private loan was taken to go to Dubai for a job, and also the loan was not being used for agricultural purposes]
Hence this case does not come under farmer's suicidal package as per GOM no 421 dt. 1.6.2004... yeh jhooth sirf iss liye ki krishi mantri sharad pawaar ko sansad men gareebe se marne waale kissanon ki ginati padhne men hichki na aaye [This lie is being told because Agriculture Minister Sharad Pawar wants to show a low count of farmer suicides]
neeche teen saahab bahaaduron ke dastakhat hain...superintendent of police, Asstt. Director (agri.) aur Chairman and Revenue Divisional Officer. [the letter is signed by Supdt of Police, Asst Director (Agri) and Chairman and Revenue Divisional Officer]
Well, this is happening simply because we prefer not to raise our voice. We, the citizens, have always kept quiet. Why should we bother. After all, it doesn't affect us nor our near and dears. In other words, we are also part of the crime.
While the RBI is quiet, the Andhra Pradesh government is at least getting ready to stem the rot. "Rogue elements who have penetrated the microfinance sector to extract huge profits by lending to unsuspecting poor at exorbitantly high rates of interest will now find it difficult to work in Andhra Pradesh. The state government has decided to file criminal cases against microfinance institutions (MFIs) that resort to coercion and use ‘inhuman’ means to recover loans extended to the poor.
It will also invoke the provisions of the AP Money Lending Act to ensure MFIs do not fleece customers with high interest charges. “The cost of funds for most MFIs will be 9-10 per cent but they are charging ridiculously high interest rates, sometimes up to 40 per cent a year,” said R Subramanyam, principal secretary, panchayat raj and rural development department.
Read the full report AP government to discipline microfinance companies
at: http://www.d-sector.org/article-det.asp?id=1234&idFor=1234
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