Hassan in Karnataka saw several women under the local BJP leader Agile Yogish stage protest in front of the Deputy Copmmissioner’s office raising slogans against microfinance institutions for demanding repayment of loans they have taken.
The women alleged that the representatives of microfinance institutions were harassing them for loan recovery, which was denied by the representatives of the Association of Karnataka Microfinance Institutions (AKMI), a self-regulatory body for all MFIs in the state.
The loans are given to women, ranging from Rs.10,000 to Rs.40,000. These MFIs take loans from major banks and as per the RBI guidelines they add their margin up to 10%, which makes these loans vary from 22% to 26%, which is relatively high compared to bank loans. But all these loans are provided without any collateral and MFIs cannot use force to recover loans either.
Often, local political representatives use the opportunity to muster strength and lead delinquency rows in villages and small towns. After the suicide incidents in AP, MFIs have been virtually driven out but many moneylenders have replaced them charging interest rates as high as 36% to 120%.
Hassan Deputy Commissioner V. Chaitra, who received a memorandum from these protesting women said she would instruct the police to register a complaint once a member files an FIR against MFI representatives.
AKMI, which held a press conference on the same day, said there is no such thing as waiving off of loans as they are private loans. They said they get loans from banks and provide these small loans to poor households at a relatively less interest rate than the money lenders. "None of our institutions are using coercive measures to recover the loan,” said Panchakshari, one of the directors of AKMI.