HYDERABAD: Tangirala Nagendramma, a Dalit woman of Paritala in Krishna district, joined the thrift movement as any other person in her village.

Things were smooth as the bank linkages and loans extended to groups by the Government agencies and banks were promptly utilised and repaid. Matters took a curious turn when two micro-finance institutions (MFIs) began their activities in Krishna and West Godavari districts and started wooing the groups.

An easy prey

Dalit, backward classes and minority community members became an easy prey for the MFIs to expand their business. The promise of quick loans with minimal documentation saw the groups lapping up the offer not realising the consequences.

The MFIs promised loans ranging between Rs. 3,000 and Rs. 25,000 at 15 per cent flat rate of interest. The non-existent and extremely inadequate loan appraisal and sanctioning procedures of the MFIs coupled with lack of any analysis saw thousands of poor women being offered loans virtually at their door steps.

Without even studying the repayment capacity of the borrowers, the MFIs approved loans. For all loans, a uniform 50-week deadline for repayment was fixed. Nagendramma was one such SHG member of Adarsha group, who was carried away by the attractive offer.

In a span of one year, she was given eight loans amounting to Rs. 42,000 by two MFIs. The promise of weekly repayment appeared attractive but pushed her into a debt trap. Being a farm labourer, her meagre earnings could not match the weekly instalments of Rs. 1,821. By the time she clears her loan, she would have made an excess payment of Rs. 5,821.

Like her, members of more than 25 SHGs in Paritala alone were caught in the debt trap and cried foul as the MFIs started using illegal and unethical practices to recover the loans. Most of the members had been offered multiple loans even before they cleared the earlier loans.

Coercive methods

The MFIs ensured that the members continued to pay interest for the loan till the 50th week even though the total outstanding amount was cleared much before.

The MFIs often obtained signatures on blank promissory notes, blank undated cheques and blank white papers. In many cases, when the loan amount was big, house site pattas, title deeds of land were taken away.

Its staff allegedly harassed borrowers, intimidated, manhandled and abused women members. Many such incidents were brought to the notice of Government officials.

What looked like attractive loans have now become a question of life and death for the SHG members, who are left to fight the staff who continue to harass them for repayment.

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