Hyderabad, October 12: MICROFINANCE institutions (MFIs) in the state have once again come under the scanner in the light of reports of distress deaths and suicide attempts by borrowers unable to bear the burden of high interest rates and default penalties.
While villagers say the MFIs, including SKS Microfinance, the country’s largest MFI, Share MicroFin and Spandana, are extracting exorbitant interest rates, MFIs deny that any of the deaths were due to pressure exerted on borrowers by their agents. “All our customers are happy and none of them have committed suicide due to pressure from our repayment agents,” M R Rao, CEO and MD of SKS Microfinance told Express. He added that instead of visiting borrowers’ homes to collecting payments, agents organise weekly meetings in the village to ensure transparency.
Typically, banks charge about 12-13 per cent interest on funds borrowed by MFIs. The MFIs in turn lend money to the needy at about 24-25 per cent. “The interest rates might look exorbitant if seen in isolation, but we do incur a cost in providing the service. These suicides could be a result of multiple borrowing, and MFIs can’t be blamed for that,” said Uday Kumar, managing director of Share Microfin.
However, none of the MFIs has a tracking mechanism or records to cross check if customers have already borrowed from other lenders, Uday Kumar explained.
–Agencies