Ravi Reddy

SERP's senior official exposes the nexus

A Nellore woman defaults on MFI installmentDaughter and son commit suicide MFIs float bogus self-help groups

HYDERABAD: Anjinamma, a poor woman of Narayanraopet in Nellore town, borrowed Rs. 20,000 from a private moneylender. After repaying Rs. 1 lakh as interest in 50 weeks, she was informed by the moneylender that she was still due to the tune of Rs. 72,000.

This came as a shock to the hapless mother of five children. A micro-finance institution (MFI) promised her a fresh loan of Rs. 1.40 lakhs to clear all outstanding dues. The agreement was that Anjinamma would repay Rs. 1.80 lakhs in 50 instalments of Rs. 3,600 each.

Facts came to light only after Anjinamma's 24-year-old son Bhavani Balakrishna and her 20-year-old daughter Bhavani Manjula committed suicide on alleged harassment by the MFI for defaulting on weekly instalment payment. The family's weekly income was Rs. 1,150 where as, the weekly instalment to be paid towards MFI loan amounted to Rs. 3,600.

A senior official of the Society for Elimination of Rural Poverty (SERP) exposed the nexus between private moneylenders and MFIs. He also laid bare the manner in which the MFIs floated bogus SHGs on paper and disbursed money.

Dubious SHGs

The senior officer told The Hindu , that the SHG with 20 members was formed in haste. The loan for Rs. 1.40 lakhs was processed flouting the stipulated guidelines.

A sum of Rs. 40,000 was deducted towards commission to the new members and to meet other additional charges.

Out of the balance of Rs. 1 lakh, a sum of Rs. 72,000 was paid to the private moneylender to clear the earlier loan. An interest of Rs. 7,200 was collected on Rs. 72,000.

Further sum of Rs. 12,000 was taken away as adjustment against small hand loans and only Rs. 8,800 was given to Anjinamma.

The official said on the directions from the Government, three teams had been constituted for each mandal for debt assessment.

Following the incident, a case was registered against the moneylender and the MFI also.

The Government is in the process of providing relief to the affected family.