Money Lenders (Sahukars) In A New Avatar
Mariam Dhawale
THE decade-long rule of the BJP-RSS has extensively damaged the lives of lakhs of families, with women precariously clinging on to any mirage of help just to keep alive. Women in India are trying to figure out how to even provide the basic needs for the family. They have to borrow money to buy food or medicines, or for education of their children. Anybody lending money in such times becomes a ‘saviour’. The micro finance institutions – non-banking financial companies enter the scene wearing the garb of such ‘saviours’ – like vultures waiting to pounce on their prey! The web of indebtedness is woven around the woman, ensnaring her, from which she has no escape.
The burden of repayment forces her to undertake any kind of work, however exploitative. So, women face mistreatment, harassment and abuse from the MFI recovery agents.
EMPOWERMENT OF WOMEN – MODI STYLE
Microfinance in India was advocated as empowerment of women. The United Nations declared 2005 as the international year of microcredit. It was propagated as a mechanism to overcome poverty. Many wrongly assumed that microfinance is the panacea for overcoming poverty. The reality has totally belied these assumptions. How can poverty be overcome when the State is retreating from providing any relief to its citizens?
Formal institutions like banks, cooperatives, etc., declined to help the needy, especially in the rural areas as the government stopped considering them as ‘priority sector’. With escalating prices and no earnings due to joblessness, women in desperate situations have no option but to borrow money to stay alive. Can a woman wait to complete bank formalities when she needs money for emergency health treatment of a family member? This waiting could take weeks, and she may still not get a loan since she will not have any collateral to give to the bank. By then her family member could die.
Therein enter the MFIs. Opportunity to enhance the wealth of its investors! The more desperate the women are, greater is the opportunity! Earlier there were the traditional moneylenders in the villages. They often reinforced caste hierarchies and patriarchal control. Yet, they were the last resort for the have-nots.
Since the 2000s, microfinance mushroomed in villages filling the gap created by the refusal to give loans by the public sector banks. Government policies shrunk priority loans to the poor. Corporates entered the sphere of giving loans, thereby profiting from the poverty of the people. This entire model of the MFIs is based on loot, shame and social pressure.
The central government and Reserve Bank of India (RBI) stood as silent bystanders ignoring the plunder by the MFIs. The failure of the government to give relief to the people, especially during the pandemic, pushed the poor even more inexorably into the vicious trap of the MFIs. Why strengthen public banks when there is a downpour of cash by the MFIs in rural India! This is ‘empowerment’ of women – Modi style!
In 2010-11, more than 70 suicides took place in Andhra Pradesh. Public humiliation, threats, intimidation, sexual harassment led to women taking their own lives, unable to withstand the pressure. Women sold household items, stopped children’s education and compromised their dignity. This led to the Andhra Pradesh government passing an ordinance in 2011 to regulate the MFIs. Later Assam (2020), Tamil Nadu (2025) and Karnataka (2025) too have enacted laws to control the NBFCs-MFIs. This exposed the empowerment theory that poverty can be overcome with credit. Poverty is the product of the neoliberal, exploitative polices of the pro-corporate government. Microfinance has turned poverty into a business model, where profit is linked not to progress, but to repayment.
RISING INDEBTEDNESS AND MFI LOOT
AIDWA recently conducted a nationwide survey on ‘Rising Indebtedness and MFI Loot’ among 9,000 women in 21 states and approximately 100 districts. This was a part of the long campaign for women’s right to affordable credit. This survey clearly brings out the loot by MFIs all over the country. AIDWA will hold a National Public Hearing on August 23-24, 2025 in New Delhi where testimonies on this loot will be presented by women from different states. A report on the analysis of the survey will be presented in this hearing. The jury for the national public hearing consists of Madan B. Lokur (retd. judge, Supreme Court), Prabhat Patnaik (emeritus professor, JNU), Pamela Philipose (independent journalist), Adv. Kirti Singh (advocate, Supreme Court), Thomas Franco (former general secretary AIBOC), Priyvrat (deputy general AISBOF, circle president AIBOC).
The rising indebtedness amongst women is a result of the pro-corporate policies of the government and the RBI, who have promoted the privatisation of banks, the weakening of the SHG-Bank Linkage programme, and the deregulation of the microfinance sector. This along with the collapse of the social welfare system is pushing women towards a debt trap.
Public sector banks give loans to women at interest rates that are higher than 11 per cent, whereas 494 corporate houses with loans above Rs 100 crores, get loans at annual interest rates that are lower than 5 per cent!
As per the RBI norms on priority sector lending from 2020 to 2025, up to 40 per cent of the lending by NBFCs-MFIs can be categorised as ‘priority sector lending’ because of which they can get loans from public sector banks at annual interest rates of 7-10 per cent. The NBFCs-MFIs lend this money to women at a much higher interest rate of 22 to 26 per cent or even more, thus profiteering from microlending. More than Rs 40,000 crore was given to NBFCs-MFIs in 2024 for microlending to women, who comprise 99 per cent of the borrowers and belong to the socially-economically backward sections. The government does not regulate these institutions regarding the interest rates charged by them. Also, there is no check on the criminal practices of extortionary methods, sexual harassment and threats by the MFIs.
Crores of women across the country are debt-ridden. They cannot repay these loans which they have taken and used for basic survival. Will the pro-corporate-communal government get up from its slumber and see the reality? The desperation and helplessness of women needs a voice. AIDWA will make all efforts to build a nationwide joint struggle to force the government to take steps to end this loot by the blood-sucking parasitic MFIs feeding on the living carcasses of the poor and exploited.
