MFI Coercion and Debt-Trap in Assam

THE microfinance institutions (MFIs) are playing havoc in rural Assam. Some twenty MFIs led by the notorious Bandhan Bank have trapped millions of women in growing indebtedness, and the women are now being subjected to tremendous distress and humiliation in the name of loan recovery. The MFIs are functioning like moneylenders – they pay very little interest on deposits and  charge high interests on loans. The current rate of interest charged by Bandhan is 17.95%.

Women below the age of 60 have to form self help groups comprising 7 to 40 members to become eligible for loans. Male members of their families, husbands, sons or brothers have to stand guarantors. The maximum loan amount currently is INR 100,000. Loans have to be repaid on a weekly basis. While loans are advanced individually, the recovery is ensured collectively. If any woman fails to repay her weekly instalment she has to face the pressure of her entire group and her valuable documents (bank passbooks, ATM cards, ration cards) are taken away, to be returned only after full repayment.

Stories of women selling their valuable family belongings to repay loans are now widespread in Assam. Like the typical usurer, the MFIs advance fresh loans and deduct the recovery amounts. Surveys show that 99% women borrowers have got two loans, 95% have got three loans, 70% have got four loans and 50% are forced to borrow from private moneylenders to repay their original loans.

In Assam, almost 70% rural households are officially identified as landless and/or below poverty line. They require loans to meet their regular monthly consumption needs. Conditions are similar in tea garden areas as well. Loans thus keep piling up in almost every household, and almost all selfhelp group members and MFI borrowers thus end up accumulating sizable debt burdens.

Since early 2020 Assam has been witnessing a spontaneous agitation of women borrowers demanding freedom from this debt burden. More than two years ago, CPI(ML) and allied mass organisations, AIARLA and AIPWA launched a ‘freedom from debt’ campaign in Dalangghat block of Nagaon district. A conference was held on 15 October 2017 and a survey was done to assess the scale and dimensions of the problem. Thousands of women joined the March 8 International Women’s Day rally on this issue. A week later, 12 organisatios came together in a convention convened by AIARLA in Guwahati Press Club on March 14 to launch a joint platform for cancellation of rural debts. Two statewide protest days have been observed since then on 27 April and 1 June.

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