May 27, 2010

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 sharks ke liye achchha hi insured tha toh unhe...usske marte hi insurance company se pure paise mil 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 on Nov 5 Bojanna thought it is better to die than to undergo this torture.....this was a blessing in disguise for the loan sum was 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


Anonymous said...

Dear Writer, The blog written by you inspirational.This is true that in India BANK does lots of irregularities in the name of Loan recovery and RBI stand as silent audience.This is issue is larger in Life--let us stand and united together--An appeal to all citizens of India.

Anonymous said...

Holy Quran Surah al fatir says that no one can be forced to carry the burden of another. Indian law and Indian courts say that borrower can escape by collusion with bank manager and innocent guarantor's house can be auctioned under the name of recovery.Is Supreme court above Quran