Lakshmina had been admitted to a hospital and had just given birth to a baby girl. The woman running the hospital asked for Rs 4,000 to discharge her. The couple did not have a single penny. Haresh requested the villagers for a loan but no one gave him any money. Helpless, he sold his son through a middleman. https://thewire.in/rights/behind-up-couple-forced-to-sell-son-for-rs-20000-an-inescapable-microfinance-debt-trap
When Haresh left farming, Lakshmina came in contact with a group of women. Microfinance companies showed her the dream of making her life better with loans. Between September and December 2023, Lakshmina and Haresh borrowed loans totalling over Rs 2 lakh from five microfinance companies. They attempted to pay instalments of one loan with the money from another loan, but in a few months all the cash was exhausted and they did not even have the money to pay the instalment.
Utkarsh Small Finance Bank lent a loan of Rs 30,000 to Lakshmina on November 18, 2023, which was to be repaid in 24 months with 25% actual interest. An instalment of Rs 740 was to be paid every fortnight. The microfinance company charged Rs 354 as processing fee, Rs 1,104 as other fees and Rs 750 as insurance fee for this loan. After deduction of these charges, she got only Rs 28,896 in hand, whereas she had to pay Rs 3,892 in 24 months including interest.
Lakshmina and Haresh have not been able to deposit amount towards this loan after April 2024.
The question arises as to why microfinance companies were giving loans to Lakshmina and Haresh, when anyone who visited their house could see their abject poverty. One microfinance company has stated Haresh’s annual income as Rs 3 lakh in its documents. If loan payments are not deposited, the borrowers are subjected to physical and mental harassment. The poor who are already financially destitute are being drained further.
In rural areas, the debt trap of microfinance companies is now firmly a death trap for the poor. Several incidents of death by suicide by people entangled in such webs of debt are coming to light. In December 2023, a woman trapped in microfinance debt died by suicide in Mishrauli village of Sevarhi area in Kushinagar district.
by Manoj Singh
17/09/2024