Women hit hard as micro enterprises dealt body blow

Meerut: A group of 400 women have been travelling from areas around Meerut to the DM’s office every day for the past week demanding relief on repayment of their microfinance loans. The micro enterprises that the women used to run have not been generating any money in cash-dry villages and they do not have any new currency to repay the installments.
The women have taken loans ranging from Rs 30,000 to Rs 40,000 from private micro finance companies such as Janalakshmi, SKS Microfinance, Fusion Microfinance, Satin Credit care and SV Creditline.They had used the loans to set up small sewing, embroidery and knitting centres of their own, which mainly relied on cash. Most of the women do not have bank accounts and the ones who do operate on zero balance as they rely on cash on a daily basis for their working capital.
Many of these women, some the sole breadwinners of their families, allege that collection agents of micro finance institutions have shown no lenience post the demonetisation move on November 8.
Carrying an infant on her lap, Sadiya Begum, from Kithore, 25 km from Meerut, brings out a crumpled piece of paper detailing the amounts owed by her. “I owe Rs 1,610 for this month. My sewing business has stopped because customers are not able to pay due to the cash crunch. I had saved one Rs 500 note, but have not been able to exchange it as the bank in our village has limited supply of cash. Let alone pay the installment, I am not even able to buy groceries for my family,” she said.
Preeti Sharma, a resident of Lakhwaya, 15 km from Meerut, said, “They (collection agents) come to our house every day and ask us for money, though they know very well we have no means of paying installments in these trying times. When we tell them we have no money to buy even food, they yell at us and say they don’t care.” Sharma had set up her embroidery business with the loan money, which has stopped generating funds now. Nargis from Ahmadnagar, 20 km from city, who took a Rs 40,000 loan to set up her stitching business is completely broke.
MFIs by definition provide loans to people who do not have access to formal banking and thus all transactions are in cash.
The RBI on November 21 had announced a guideline with respect to loan repayment to microfinance institutions, wherein it stated, “If an end client needs extra time to make arrangements for the new notes for repayment of the loan, then the lending institution may give that time.”
Collection agents, however, seemed unaware of this guideline. On the condition of anonymity, one such agent with an MFI working in the region, told TOI, “No such guideline has been passed down to us by higher authorities in the company.”
The authorities, meanwhile, remain in a fix. Additional district magistrate (finance) Gaurav Verma said, “It is not in our hands to waive off loans owed to private companies. If they (these women) give us a memorandum of demands, we can forward it to the finance ministry.”
Radhakrishnan VS, managing director and CEO of Janalakshmi financial services limited, however, said, "RBI has not allowed any moratorium on repayment. It is only a moratorium of classification of loans for the lending institution." He added that they allow time to people who cannot pay but caution them that regular interest will be chargeable for the extended period.