The Hindu : Karnataka / Bangalore News : Brinda Karat: micro-finance Bill will kill self-help groups

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Friday, Jun 29, 2007
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Brinda Karat: micro-finance Bill will kill self-help groups

Staff Reporter

State-level convention of SHG members demands scrapping of Bill

— Photo: Bhagya Prakash K.

Rallying support: Brinda Karat, MP and All-India Democratic Women’s Association vice-president, interacting with women at a conference on the micro-finance Bill in Bangalore on Thursday.

BANGALORE: The Micro-Finance Sector (Development and Regulation) Bill, 2007, which the Centre proposes to introduce, is an “astra” in the hands of Union Finance Minister P. Chidambaram to kill the Rs. 3,000-crore self-help groups phenomenon, Brinda Karat, MP and vice-president of the All-India Democratic Women’s Association (AIDWA), said here on Thursday.

She was inaugurating a convention of over 1,000 representatives of self-help group federations from all over the State to highlight the “terrible consequences” that would follow if the Bill became law.

CPI(M) to fight Bill

The Communist Party of India (Marxist) Central Committee had already decided to fight the proposed Bill “tooth and nail”, Ms. Karat said and shared with the delegates Mr. Chidambaram’s response when women had asked him to come up with laws to strengthen the SHG sector and empower the women in better ways.

“I suggest Mr. Chidambaram change his tinted glasses for plain ones, so he can see the sacrifices these four crore women make to save Rs. 50 a month and in turning micro-finance into a Rs. 3,000-crore sector,” she said.

When women’s groups and women elected representatives asked him to strengthen the sector by creating a women-friendly banking sector where the savings of these women could entitle them to low-interest loans and a secure environment where innovative micro-economies could thrive, Mr. Chidambaram’s response was, “women are not demanding low interest rates, they only want greater access to loans”, Ms. Karat said.

The SHG sector’s main demands are: better linkages between SHGs and banks; interest at 4 per cent or less on loans; a special scheme or mechanism to revive and strengthen SHGs of Dalits, Adivasis and landless labourers, which have disintegrated because the members could not afford to sustain them; and training and assistance in marketing and management skills for these women.

‘Women short-changed’

Though the SHG kitty has over Rs. 3,000 crores, individually the women have always been short-changed with the average individual borrowing amounting to no more than Rs. 4,000. This needed to be addressed, she said.

Instead, what the Finance Minister had proposed in the form of the Bill was the return of the “village moneylender” in the shape of private micro-finance institutions (MFIs), which would have the freedom to play the market with the savings of the SHGs and levy interest according to their whims: it could be 15 per cent or even 50 per cent. They would not be regulated or punished, and fly-by-night MFIs could disappear overnight if they failed to perform (losing the money saved by the women) because there was no mechanism to punish them, Ms. Karat said.

The consequences of passing this Bill into law had already been witnessed in Andhra Pradesh, which saw 30 “SHG suicides” ten months ago, Ms. Karat said. MFIs had virtually fleeced the SHGs and 30 women had committed suicide because they were unable to repay loans.

AIDWA State general secretary K.S. Vimala and president K. Neela addressed the delegates, and resolutions were passed to demand the scrapping of the Bill.

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