Petty Politics Over Small Loans
The extortionist interest rates and other conditions, despite the stiff arm some of the area lender as a savior in times of family crisis. Often depicted in movies as a heartless shark exploiting the misery of the poor, the village moneylender felt threatened after the emergence of several Microfinance Institutions (MFIs) that small loans without paperwork. in recent months, the entire microfinance industry thrown out of gear after a crackdown by the Andhra Pradesh government. In within weeks of its successful initial public offering was the top management engaged in a bitter power struggle, which led to the departure of several senior executives.
But it was the intervention of the government that forced the MFI to pull down its shutters, albeit temporarily. Ruling politicians accused of charging high interest rates, reportedly causing some borrowers to cut their lives short. In the resulting confusion, existing borrowers refused to repay their loans. full range of issues related to the functioning of the MFIs to investigate. The committee in its report last week, most crucially, recommended a 24 prevent interest rate cap on microfinance loans to individuals. In the meantime, the Andhra Pradesh government passed legislation to penalize MFIs if they take coercive measures in their operations.