Demonetisation of high value currency and the inability of the common man to draw money from banks and ATMs has come as a boon for micro finance institutions (MFIs), which are slowly but steadily luring people with what it calls - soft loans.
Taking advantage of shortage of money in the market, the micro-finance companies are slowly re-entering the Sircilla textile town and lending small loans to powerloom weavers and beedi workers.
Two micro-finance companies started providing loans ranging from Rs 2,000 to Rs 5,000 after collecting bonds and sureties. They collect a whopping interest rate of 36 per cent and burden the weavers and beedi workers. People of Sircilla still remember the harassment by micro-financers who operated till 2008, said Samalla Mallesham, AITUC leader. A beedi worker, Kalpana, says MFIs are taking advantage of the situation and providing loans as beedi companies are not giving wages following the demonetisation. She said that the administration should take measures to eradicate the role of micro-finance companies at the earliest. It may be recalled that the then Chief Minister of united Andhra Pradesh Y.S Rajashekhara Reddy removed micro-finance companies by making the nationalised banks provide loans to weavers and beedi workers under Total Financial Inclusion (TFI) programme. There were incidents of weavers resorting to suicide unable to bear the mental agony and torture by the agents of micro-finance companies. Demonetisation has cast its shadow on the powerloom industry which is already reeling under crisis due to no-takers for their grey fabric (produce) in Sircilla textile town.
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Usually, November and December months are lean season for the movement of fabric. Announcement of demonetisation has come as a rude shock to the main purchasers of fabric - traders, powerloom owners and powerloom workers. As the fabric production and sales are done only through cash, the ban and restrictions on withdrawal of cash from banks has become a cause of concern for all persons involved in the industry. Adepu Ravinder, a powerloom owner, says the industry is totally zero business (no bills or taxes) and there are no banking transactions.
Besides no banking transactions, there are neither bills nor taxes in powerloom industry