VIJAYAWADA: In a strange quirk of fate, if any self-help group (SHG) member dies the benefits of her insurance cover would go to the micro-finance institution (MFI) which extended loan to her.

This might sound strange, but SHG members are clueless why family members of the deceased do not get the benefit. A spate of complaints have been pouring in from West Godavari and Krishna districts as to what was happening to the insurance charges collected by MFIs.

During a visit to Mylavaram and Ibrahimpatnam mandals in Krishna district and Eluru, Chintalapudi and Pedavegi mandals, in West Godavari district, this correspondent found that not even one SHG member, who borrowed money from MFIs, was issued insurance papers.

Empty promise

When a member borrows money, Rs 20 to Rs 70 is collected towards insurance. Members are told that the loan would be waived if the insured person dies. In addition, Rs. 2,000 would be given to the family for the last rites.

Instead of having a family member as the nominee, a representative of MFI is named as the nominee. Insured members do not have any say because they are not issued any policy paper.

Sujata of NV Nagar in Chintalapudi was surprised when asked about the insurance premium she had paid. "There is no mention of it in the passbook," she quipped. Uma Maheswari, vice-president of the Village Organisation at Koppaka, in Pedavegi mandal, pointed out that most of the insured were not informed about the policy.

Group members in Ibrahimpatnam mandal said many of them had signed blank papers when recovery agents asked them. "We do not know what will they do with the papers," said Rabiya. Whenever a member died, MFIs extracted a written undertaking that it was due to ill-health.

Grim scenario

Indira Kranti Patham officials in Krishna district said of the 10 deaths due to harassment not even a single family received insurance. West Godavari District Rural Development Agency Project Director C. Sridhar said in many cases members were kept in the dark.

T. Vijay Kumar, CEO, Society for Elimination of Rural Poverty (SERP), in a report to the Government earlier this month suggested that the Insurance Regulatory Development Agency (IRDA) look into the gross violation of various laws. More than Rs. 200 crores was collected as insurance premium for which there was no documentary evidence, a senior Rural Development Department official said.

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