<people are dying becos of its faults
--so stop it --then the same logic can work for
stopping road travel and sea travel etc --becos people
do die in traffic and travel accidents>
As I said "Umesh ,Grow Up - and Fast!"
mm
From: umesh sharma <[EMAIL PROTECTED]>
Reply-To: [EMAIL PROTECTED]
To: Chan Mahanta <[EMAIL PROTECTED]>, [email protected]
Subject: Re: [Assam] Fwd: [WaterWatch] Death by Micro Credit-2
Date: Thu, 28 Sep 2006 22:32:36 +0100 (BST)
>C-da,
>
>Good article but if we draw the moral that
>micro-credit is bad becos it is not effectively
>implemented and people are dying becos of its faults
>--so stop it --then the same logic can work for
>stopping road travel and sea travel etc --becos people
>do die in traffic and travel accidents.
>
>Umesh
>
> > >
> > >Death by Micro Credit-2
> > >
> > >
> > >I dont know why writers always give interest
> > >rate charged as just 20% when in GOI report on
> > >Vidharba gave the figure to be as high as 5% per
> > >month to even 1.5% per day. World Bank report of
> > >2003 (Report No. 25797-IN) also state that
> > >interest rate charged from farmers and SME is
> > >36% to 120% per year.
> > >
> > >Access to Rural Credit Page 108! of WB- 25797- IN
> > >
> > >[3 .8 1 India has a wide network of rural
> > >finance institutions (RFIs), but a large number
> > >of the rural poor remain under-served or
> > >completely left out of the formal financial
> > >system. There are over 30,000 commercial bank
> > >branches, over 14,000 regional rural banks
> > >(RRBs), and over 100,000 rural credit
> > >cooperatives (RCCs) in addition to several
> > >non-bank financial institutions. This translates
> > >to about 4,700 people served by each RFI outlet.
> > >However, the last available rural household
> > >survey (Reserve Bank of India 1991) found that
> > >only about one-sixth of rural households
> > >borrowed from formal RFIs. Non-institutional
> > >sources accounted for as high as 52-62% of
> > >household outstanding debt. The rural non-farm
> > >sector also faces constraints to accessing
> > >finance. A recent study covering some 20 million
> > >small-scale rural enterprises (in the
> > >unorganized sector) found that commercial banks
> > >reportedly meet merely 4% of the credit needs of
> > >this sector, and micro-finance sources provide
> > >another 3% of their credit needs.
> > >Various estimates suggest that Indias rural
> > >poor rely almost entirely on informal sources
> > >(money lenders, traders, commission agents,
> > >etc.) to meet their consumption credit needs, at
> > >annual interest rates ranging from 36% to 120%
> > >per annum.]
> > >
> > >My uncle told me the standard procedure in
> > >Ludhiana, Punjab is moneylenders give a loan !
> > >of say Rs.1,00,000/- on stamp paper. Actual
> > >money released is 85% or Rs. 85,000/- and the
> > >loan is payable at Rs.1000 per day or 1% per day
> > >from day one.
> > >
> > >Compounding of 15% alone comes to 66% annually
> > >but again Rs.1000/- returned per day lend at
> > >same rate shall also fetch similar return
> > >therefore actual interest rate may come close to
> > >100%.
> > >
> > >Supply of spurious seeds, pesticides and
> > >fertilizers, very low MSP and takeover of farm
> > >produce by moneylenders at harvest time when
> > >prices are at it lowest compounded with draught
> > >or unseasonal rain destroying crops, lack of!
> > >public healthcare all at add up to the financial
> > >burden.
> > >
> > >Farmers are forced to sell their land to pay for
> > >treatment of their family members or to get them
> > >admissions to schools and colleges in
> > >mushrooming private hospitals and educational
> > >institutions.
> > >
> > >Ravinder Singh
> > >September28, 2006
> >
> ><mailto:[EMAIL PROTECTED]>[EMAIL PROTECTED],
> >
> > ><mailto:[EMAIL PROTECTED]
> > > hoo.com>[EMAIL PROTECTED]
> > >
> > >From: sudhirendar
> >
> ><<http://us.f349.mail.yahoo.com/ym/[EMAIL PROTECTED]>sudhirendar@
> >
> > >bol.net.in>
> > >Date: Sep 26, 2006 3:13 PM
> > >Subject: Micro-Credit
> > >To:
> >
> ><http://us.f349.mail.yahoo.com/ym/[EMAIL PROTECTED]>krishnagreen@
> >
> > >gmail.com
> > >
> > >(from The Times of India, Sept 16, 2006)
> > >
> > >Death by Micro credit
> > >
> > >Sudhirendar Sharma
> > >
> > >The tragic suicides by more than 60 self-help
> > >group members in Andhra Pradesh during April
> > >this year may have been subsumed under the
> > >unending spate of farmer suicides in the
> > >Vidharba region of Maharashtra but the hidden
> > >dimension of micro-credit revolution in the
> > >country has only begun to surface. Reports
> > >indicate that the actual number of suicides may
> > >exceed 200 in the SHG-saturated districts of
> > >Krishna, East Godavari, Guntur and Prakasam
> > >where intimidation of families by the
> > >Micro-Finance Institutions (MFI) against
> > >reporting the matter to police had surfaced.
> > >
> > >Following protests staged by mourners and
> > >enraged borrowers, ! the district authorities
> > >closed down 50 branches of two major microfin
> > >ance institutions in the state. The erring MFIs
> > >were charged with exploiting the poor with
> > >`usurious interest rate' and intimidating the
> > >borrowers by `forced loan recovery' practices,
> > >combined effect of which drove debt-ridden poor
> > >to embrace death. An anguished Chief Minister Y
> > >S Rajasekhara Reddy had lashed out: `MFIs were
> > >turning out to be worse than moneylenders by
> > >charging interest rates in excess of 20 per
> > >cent.'
> > >
> > >As the government began in-depth enquiry into
> > >suicide deaths and the MFIs launched themselves
> > >into damage control measures, many affected
> > >families were left wondering if the government
> > >had not played ignorant to the modus operandi of
> > >MFIs. The fact that micro-credit loans earned
> > >interest in excess of 20 per cent has been no
> > >secret. Borrower harassment by MFIs hasn't been
> > >uncommon either. Having been in the business of
> > >creating self-help groups and promoting
> > >micro-credit institutions, the government cannot
> > >absolve itself from being in the thick of the
> > >fatal crises.
> > >
> > >Given the fact that the commercial banking
> > >system has little regard to the bottom-of-the-
> > >pyramid group as being creditworthy, the MFIs
> > >have enjoyed unrestricted political patronage in
> > >extending credit services to the poor. The
> > >Reserve Bank of India statistics indicate that
> > >micro-credit constitute no more than 15 % of all
> > >commercial bank lending, leaving MFIs to cover a
> > >clientele of over 200 million families in the
> > >rural areas. Taking shelter behind these
> > >numbers, the MFIs have requested the government
> > >not to pursue the matter further as it was
> > >detrimental to the interests of the poor!
> > >
> > >Are MFIs genuine in catering to the interests of
> > >the poor? So it may seem as easy credit in rural
> > >areas has brought about significant turnabout in
> > >lifestyle, however, at the cost of plunging poor
> > >households under debt. The latest National
> > >Sample Survey Organisation (released in Dec
> > >2005) survey reveals that rural households
> > >account for 63 per cent of the country's overall
> > >aggregate outstanding debt of Rs 177,000 crore.
> > >The incidence of indebtedness was reported to be
> > >about 27 per cent among rural households,
> > >predominantly being in the rural areas of Andhra
> > >Pradesh, Kerala, Rajasthan and Karnataka.
> > >
> > >There are number of cases which suggest that a
> > >large proportion of micro-credit clients are
> > >worse off after accessing loans. Since higher
> > >interest rates on micro-credit do not provide
> > >scope for savings as also for investing in
> > >insurance, the dominant risk-covering factors
> > >for the poor, micro-credit seldom propels poor
> > >out of poverty. Further, there are no businesses
> > >that can generate profit after paying an
> > >interest of 24-36 per cent on capital
> > >investment. Else, why after mobilizing more than
> > >Rs 5 billion the average saving per member of
> > >the SHG is a pitiable Rs. 377 in Andhra Pradesh?
> > >
> > >MFI pay little attention to the core concerns of
> > >the poor. For them the critical concern is to
> > >sustain services against emerging odds. The
> > >brewing crisis in Andhra Pradesh has not only
> > >exposed the `unethical' practices by MFIs but
> > >has raised serious questions on the regulatory
> > >measures applicable to them. As the murky world
> > >of MFI operations comes to fore, the government
> > >is seized of the seriousness of the issue in the
> > >wake of an assessment report on many cases of
> > >`unnatural deaths' that has cautioned the state
> > >against `an imminent danger of more suicides in
> > >the offing'.
> > >
> > >With credit being considered the panacea to
> > >eradicating rural poverty, it is doubtful if
> > >political decisions will weigh heavy against
> > >MFIs. As poverty gets directly co-related to
> > >reduced cash flow, providing easy credit through
> > >host of lending institutions creates an illusion
> > >of `feel good' amongst the rural poor. In many
> > >ways, micro-credit justifies the ongoing
> > >processes of decentralization too. As poor take
> > >control of their destiny through soft loans, it
> > >becomes convenient for the government and the
> > >commercial banks to absolve themselves of their
> > >primary responsibility towards the poor.
> > >
> > >Micro-credit has caught on so much, courtesy the
> > >donors; that its promoters have gained immunity
> > >under a weak regulatory environment. Marlene
> > >Dietrich had rightly said: `there is a gigantic
> > >difference between earning a great deal of money
> > >and being rich'. Far from helping people
> > >generate wealth, easy credit is being used to
> > >encourage primary producers at the farm to
> > >become secondary distributors for consumer
> > >products. Howsoever lucrative, the transition
> > >has severe implications on the livelihoods
> > >security, and now on lives of poor people.
> > >
> > >As micro-credit takes its toll on the lives of
> > >poor households in Andhra Pradesh, the future of
> > >the self-help groups and the micro-finance
> > >institutions has come under scanner. However,
> > >unless the government jumps in to apply
> > >stringent regulations on MFI operations
> > >alongside throwing a safety net around the poor
> > >and the vulnerable, micro-credit related
> > >suicides will become more of a norm than
> > >exception. In a country where farmer suicides
> > >have been largely accepted, accommodating
> > >suicides of another kind may not be out of place!
> > >
> > >Formerly with the World Bank Dr Sudhirendar
> > >Sharma is a development analyst attached to the
> > >Delhi-based the Ecological Foundation. He can be
> > >reached at
> >
> ><http://us.f349.mail.yahoo.com/ym/[EMAIL PROTECTED]>sudhirendar@
> >
> > >vsnl.net
> > >
> > >
> > >
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>Umesh Sharma
>5121 Lackawanna ST
>College Park, MD 20740 USA
>
>Current temp. address: 5649 Yalta Place , Vancouver, Canada
>
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>Canada # (607) 221-9433
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>Ed.M. - International Education Policy
>Harvard Graduate School of Education,
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