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MFI employees agents of suicide……Jinka Nagaraju
They Provoke Defaulters To Kill Selves To Recover Loans From Insurers: Study Hyderabad: A government study has found that some micro finance institution (MFI) agents themselves encourage debtors to commit suicide so that their loans are repaid,as borrowers are covered by insurance.
MFI agents are provoking defaulters to commit suicide as all the borrowers are covered under insurance and if the defaulter dies,the MFI will get the repayment from the insurance, said the study by Sujata Sharma,project director of District Rural Development Authority of Warangal.
Sources said,MFIs draw up an insurance plan for the borrower under which in the eventuality of suicide,they recover the amount from Loan Protection Fund,under which 10% of loan amount is deposited with RBI,which repays the remaining amount due from defaulter.
CEO of Society for Elimination of Rural Poverty said: A major modus operandi is to lure a selfish SHG group member by bribing her to introduce MFI agents to other members. The MFIs also gather information about marriages,death ceremonies and other rituals and then cajole the family members to take a loan and organise it in a big way.When it comes to recovery,The pressure is so strong that the family is forced to mortgage whatever little it has,including the ration card, the report said.The family then loses food security.
MFIs become the meanest when the loan amount is still not recovered.One member of the village puts pressure on the defaulter.The embarrassment is so huge that it is pushing the defaulters to commit suicide, the study said.
SKS moves HC
Hyderabad: SKS Microfinance Limited and Microfinance Institutions Network on Tuesday approached AP high court through separate petitions urging it to quash the recent Andhra government ordinance against MFIs after declaring it illegal. |