“Women fall into debt trap by borrowing loans from MFIs”

Former Kerala Finance Minister Thomas Issac and Professor R. Ram Kumar of the Tata Social Sciences Institute said on Sunday that many women across the country had fallen into the debt trap by taking out debt. credits from different microfinance institutions (MFIs) instead of acquiring economic empowerment.

The duo said this when addressing 4th Sushila Gopala memorial speaker on “Women in the Modern Pawnbrokers Web” hosted by the Odisha Unit of the Democratic Association of India (AIDWA) here. The two speakers claimed that MFIs charge more than 11.25 percent interest on loans given to women’s self-help groups.

Sometimes the interest rate for MFIs is around 60 percent and in some cases over 100 percent as well. MFIs took 24 percent interest from women’s autogroups other than processing fees. As a result, unable to repay the loans, the women’s groups opt for another loan to make the payment. In the process, they get caught up in the debt trap and are unable to overcome it, let alone become economically independent, ” they said.

They also alleged that such regulation did not exist for MFIs.

AIDWA National Secretary Tapasi Praharaj said women’s self-help groups were extremely exploited by MFIs and this was possible because banks were reluctant to provide loans directly to women’s groups.

Praharaj said banks should give loans directly to women’s groups instead of hiring MFIs.

“The interest rate should not be more than 11.25 percent as stipulated by the RBI and all states should have a mechanism to arrest the modern monetary rulers who have arisen on behalf of MFIs,” she said. declared.

Speakers said that women’s economic conditions have deteriorated further due to the lack of jobs, jobs and earning opportunities due to the current COVID-19 pandemic. Whatever arrangements governments take, they mainly benefit MFIs and not women, they said, demanding strict regulation of the activities of “institutional financial leaders”. PTI AAM RG RG

(This story was not edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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