MFIN demands independent judiciary enquiry for allegations against MFIs
- Wednesday, October 20, 2010, 18:16
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Microfinance Focus, Oct 20, 2010: Responding to the allegations made against microfinance institutions in the media by government bodies like District Rural Development Authority (DRDA) and Society for Elimination of Rural Poverty (SERP), Mr. Alok Prasad, CEO of MFIN (Microfinance Institutions Network) said, “To make a correct determination of any matter, proper enquiry needs to be done but I strongly feel that people are arriving at conclusions even without proper investigations”.
“I want an independent enquiry do be done and whatever the conclusion be, we have to accept it. The truth should be established and whatever needs to be done, should be done” he added.
Apart from the daily media reports which is blaming microfinance institutions for the series of suicide cases that happened over the period of last one month in Andhra Pradesh, a study conducted by Sujata Sharma, project director of DRDA of Warangal claimed that MFIs are provoking defaulters to commit suicide as all the borrowers are covered by insurance and if the defaulting member dies, the MFI will get the repayment from the insurance company.
“Somebody needs to ask the government and people who are publishing whatever they are publishing as to what investigations they are doing to establish the truth. They are bringing up anything and hanging it around the neck of MFIs”
Further, Budithi Rajasekhar, CEO of Society for Elimination of Rural Poverty (SERP), the monitoring body of Self Help Groups (SHGs), has also issued a statement in one of the leading newspaper saying, “A major modus operandi is to lure a greedy SHG group member by bribing her with money and gifts to introduce the MFI agents to other members. For example, in Dubbaka mandal of Medak district, all the MFIs formed a syndicate to coerce the members to take loans.”
Responding to his statement Mr. Alok said, “I would like to know what investigations SERP has done before giving out such a statement. I feel that SERP is an interested party which is feeling insecure for many reasons and thus making such baseless remarks”.
Mr. Alok also assured that strict actions will be taken against MFIs if it is established that people are committing suicide because of MFIs practices.
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2 Comments on “MFIN demands independent judiciary enquiry for allegations against MFIs”
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MFIs must not set target to give loans which is unproductive and which cannot generate income to the borrowers. They are making other members in the group to be responsible for the repayment. The attitudes of the members to keep their group clean. The pressure from the groups in the habitat make them shame and only alternative they had before them is commit suicide. this should be stopped MFIs should give loans to those who can able to earn and repay the loan instead they are borrowing loan from other MFI to repay the loan that is how the borrowers were pushed into debt trap which they never come out of it. MFI should also have the social responsibility human values one life ends for want of few hundred rupees is shame on the part of people who runs the show.
The manner in which Alokprasad has reacted to the allegations of widely prevalent anti-poor practces of reckless lending policies,forcibly thrusting the poor to unbearable levels of indebtedness irrespective oftheir capacity to absorb additional loans productively for meeting the weekly repayment obligations,bribing away existing borrowers from the organically evolved SHGs through the brokers ,enforcing collaterals for micro-loans,unjustifiedly high interest rates plus a number of hidden costs and following an out and out non-transapent policy etc only betrays that the for-profit NBFCs are totally mortified with the proclamation of the A.P Ordinance.
It is now too late for them towake up and it seems that civil society and the authorities have stood up for just cause and the poor at last find somehope for coming out of the iron clucches oftheMFIs operating only to satisfy the greed ofthe investors.
Baladeb Sen
Sr.Consultant