Financial Inclusion and Politics in Indiya

Dramatic events are often part and parcel of a democratic nation. Be it allocation of 3-G connection or small loans to rural poor who are excluded from banking, there is always a series of events that get listed as breaking news on news channels or get festooned on front pages of local print media. Every event touching lives of large number of people often takes a political turn with leaders from all parties coming together and adding their own flavors concocting altogether new situations. I am using this platform to share one such event which took place in the heart of India.

 This region is notorious for suicides by farmers who were in debt trap. Nowadays suicides in the area are being attributed to credit offered by Micro-finance Institutions or MFIs. These institution use social security to offer small loans to poor and un-bankable people. The interest loans charged by these companies are often higher in comparison to bank loans due to greater cost of funds taken by these MFIs from banks or private investors and higher operational cost as they provide loans or do recovery at doorsteps of customers.But inspite of all these, they are much cheaper than those offered by local private moneylenders. In recent year a number of companies have mushroomed in India. Many people have been benefited by financial assistance provided by these companies but at the same time easy access to money and very huge targets given to field staff of these MFIs has resulted in indiscriminate distribution of credit and over indebtedness of their customers. An amalgamation of personal as well as financial problems is often as hazardous as potassium cyanide and people often succumb to such pressure and take extreme steps such as suicide.

Recently one such sad incident took place in one of the towns in this region where a lady has taken credit from a couple of MFIs. This lady who was mired in the debt trap had some altercations with her husband a night before recovery date. In morning it was found that she hanged herself. People from MFI came for recovery and insisted on repayment and also used some unparliamentary language. Such a situation at the funeral place instigated unrest among the community and people gathered there firstly thrashed employees and then ransacked their office. A complaint was lodged in local police station against the company and a memorandum regarding coercive recovery practices used by MFI staff was submitted to local administration. People involved into all those things also took into confidence local leaders and also threatened other people in city not to repay to MFIs. MFI employees who went for recovery were threatened and were not allowed to collect recoveries. Pamphlets were printed in which an appeal to public was made not to pay to any of the MFIs and were distributed all across the town. The current Andhra Pradesh embargo is adding fuel to fire rather it started the fire itself as cash squeezed MFIs are not able to disburse any loans since mid of October.There are rumors in market that these companies are shutting down. The biggest irony is that those customers to whom MFIs are catering will fell into debt trap of local money lenders again and thus majority of people want that MFIs should continue their operations but the long pause in disbursement is razing one big question mark in their minds: To pay or not to pay?
A lot of wrong things have happened in the field that has resulted into current state of MFIs in Indiya. Some of them are as follows:

1. Indiscriminate disbursement of money without realizing the absorption capacity of customers or without taking into consideration the purpose for which a customer is availing loan..
2. No appraisals before disbursement of loans in most of the cases.
3. Multiple lending to same customer by different MFIs.
4. Mutual respect plays an important role in any business. So MFI staff need to give due respect to their customers and avoid using coercive recovery measures/ castigating remarks.
5. Politics on present situation and resorting to populist measures rather than finding constructive solution to the problem. 

Reserve Bank of India has appointed one committee under the leadership of Mr Malegaon which need to submit a review by end of January. Hope it will soon come out with some suggestions which will be helpful in avoiding untoward incidents in the field.

Lets hope for the best! Merry Christmas.

Never Imagined that I'll start blogging one day

A line in Bodhitree's GMD goes like this- "Gaon main saabun bech raha hai jhoot hai uska hasna."

Well it may be true in case of XLRI but do we need to rethink when we talk about IRMANs?
At least in my case situation is no different although I have stayed in remote villages but never had the feelings that I am having these days- Solitude has slowly turned into feeling of loneliness. I may not be selling soaps in villages but still working in an office setup that is very much similar.Why are seniors so much mollycoddled in India? When juniors show such behavior then every time even I have to dissemble sincerity and commitment when actually I feel like saying "who cares" or "what the F***". Not being yourself is not everybody's cup of tea and when you are short of other options then frustration keeps on mounting. Hats off to all those hospitality people with plastic smiles pasted perennially to their faces. Being a prisoner is much better than being a management trainee- at least they have fellows with whom they can talk freely. I was never fond of talking on cellphone and most of the times it acted as a landlines during my college days but these days I keep on staring it hoping that my stares will make it ring. Sound of its ring tone seems even more melodious than compositions of Mozart or Beethoven. Every time when I look at my laptop screen something within me says -"Don't you have anything else to do?". I shut it down just to realize that I have no other option than to reboot it or go for a walk alone in unknown city or go to sleep. I love to go for long walks but every time it is not feasible and there is a limit beyond which a human being cannot sleep. So the only option left is to boot it again and search for those green signals on Gtalk. Live is full of irony- when you are busy then you have a lot of things to discuss with your friends but when you are free and have ample time then you fell short of ideas and the chat just restricts to "Kya haal chaal hain - main theek thaak tu bata - aur kya chal raha hai -kuch nahin life as usual and then a BIG pause. A pause that has filled up life of management trainees like me who keeps on wandering to new locations with new set of problems.

I never dreamed of writing a blog but then may be blogging is one way of fighting that blankness which has eclipsed my present life.I don't know whether it will help in making things better but I am happy that it has kept me engaged for last couple of minutes.