INDIAN MICRO-CREDIT CRISIS PUTS POOR WOMEN IN A BIND

[Inspired by Grameen Bank, the Bangladeshi Nobel Peace Prize-winning institution that launched the micro-credit revolution, millions of poor Indian women have organized themselves into groups since the mid-1990s to qualify for small, uncollateralized business loans. India’s formal banking system, with just 30 percent of its branches in rural areas, has long been inadequate to meet the credit needs of most rural households.]

By Rama Lakshmi, 

  Lakshmidevi Narayana, 50, runs  her own grocery shop 

which  she bought with microcredit a few years ago,  

in Nagaluti, India. (Image: Rama Laxmi)

Budhavaripeta, India — Husaina Abdul Nabi turned to micro-credit companies in the past six years to buy a noodle-making machine, pay her disabled husband’s health bills and send her children to school.

But a crisis in India’s private micro-credit industry — fueled by a spate of suicides blamed on abusive lending practices here in the southern state of Andhra Pradesh and a subsequent legal clampdown — is driving women like her back to traditional village moneylenders.

“There have been no new loans for the last six months. Women are getting desperate now and have no other option,” said Nabi, 40, who runs a business in this hamlet making Indian-style noodles to support her family of six. The moneylender made Nabi pledge her family jewelry and charges her 120 percent interest on the loan.

“The moneylenders are back in demand now,” she said. “They are drinking our blood.”

Analysts say they worry that the prevailing climate of distrust, default and desperation in Andhra Pradesh, which has the highest number of micro-lending businesses in India, may have reversed a decade of work toward the goal of financial inclusion for poor women.

Inspired by Grameen Bank, the Bangladeshi Nobel Peace Prize-winning institution that launched the micro-credit revolution, millions of poor Indian women have organized themselves into groups since the mid-1990s to qualify for small, uncollateralized business loans. India’s formal banking system, with just 30 percent of its branches in rural areas, has long been inadequate to meet the credit needs of most rural households.

In the past few years, scores of for-profit companies have sprung up across rural Andhra Pradesh, handing out small, easily obtained loans. The industry grew at a rate of 70 percent annually, but loan recovery practices were often coercive. The state government attributes at least 93 suicides to abuses and has imposed a strict law that observers say has brought the industry to a halt.

“If there are a few road accidents in the night, you don’t ban all nighttime traffic,” said Vijay Mahajan, the president of the Microfinance Institutions Network and the head of Basix, one of the oldest micro-lending companies. “There is no doubt that there was widespread wrongdoing by three or four companies, but the new law is draconian.”

The political backlash against the companies has also triggered widespread willful default by women across Andhra Pradesh, where about $1.5 billion in unpaid loans has accumulated.

“When the loan recovery officers come to the village, we chase them away,” said Ramanamma Annayya, 35, of Nagaluti village, who runs a granite mine and wears a man’s shirt over her floral-printed sari. She has four unpaid loans. A woman in her village killed herself in September by drinking pesticide after micro-credit companies harassed her when she defaulted.

“Now we want the government to write off all these loans given by the private companies,” Annayya said.

That trend worries many who built the movement.

“It took us so many years to demonstrate that poor women are creditworthy too,” said Vijay Bharati, a woman who developed women’s self-help groups in 27 villages. “But the women who were so regular in repaying for the last 15 years are now waiting for a waiver of their loans. This is damaging our movement.”

The movement’s success is visible in villages such as Oravakallu, where women have used credit not only to alter their lives but also to shape the community’s future, building a new school where children will be taught English.   

“When money started coming into our hands, we became fearless,” said Ramakka Lakshmana, 60, who is illiterate and owns a small mango orchard.

Meanwhile, micro-credit companies are also trying to reinvent themselves. Delegates met at a New Delhi conference recently and vowed to set up a complaint-handling system, treat borrowers with dignity and not choose profits over the women’s prosperity.

“When you are dealing with poor, illiterate or semiliterate borrowers, you have to do away with the goal of achieving 100 percent loan-recovery rate,” said R. Prabha, an adviser to Sa-Dhan, a micro-finance company that evolved a code of conduct for the industry. “You have to have a policy to deal with genuine and willful default.”

A few companies have begun looking at different business models — such as giving loans against women’s gold jewelry — in an effort to survive in the state. 

Next month, India’s federal reserve bank is expected to announce new national regulatory guidelines for micro-credit firms. But the Andhra Pradesh state law is unlikely to change, say officials.

Under the new state law, firms must submit to a maze of bureaucratic scrutiny before they can give out a fresh loan.

“It was a free-for-all earlier,” said Aviligonda Govindappa, a rural development official in Kurnool district. “We need to ensure that village women’s need for credit is not exploited.” The state government has said it will also soon set up its own finance institution for small loans.

State law now prohibits loan recovery officers from visiting a woman’s home, stipulating that debts can be collected only in the presence of other women.

“When I go to ask for loan repayments, I sit in the village school or the council building and wait for the women to turn up,” said Pamula Pedanna, a manager with the micro-credit company Spandana Sphoorty. “Earlier, they would wait for me on the assigned date with money in their hands. Nowadays, they don’t come even after I send word.”

@ The Washington Post

NEPAL PM'S INDIA VISIT BECOMES UNCERTAIN

[ Now with the budget session starting in Nepal from May 2, the chance of Khanal finding time to call on his southern neighbour in May has become very slender. After the Istanbul conference, only a fortnight will remain for the government to unveil a new constitution. The possibilities of the Khanal government being able to promulgate a new statute by May are remote and the PM has already been hinting at extending the term of parliament yet a second time. ]

Nepal PM Jhal Nath Khanal and Indian
External Minister S. M. Krishna

KATHMANDU: Though Nepal's foreign secretaryDr Madan Kumar Bhattarai has flown to New Delhi to hold talks with his counterpart, Nirupama Rao, on Thursday to set the agenda for Nepalpremier Jhala Nath Khanal's first official visit to New Delhi next month, the trip has now become uncertain following developments at home. 

Both New Delhi and Khanal had been keen on his visit to India in the first week of May, prior to the Nepali PM heading towards Istanbul to attend the 4th UN Conference on the Least Developed Countries from May 9-13. However, protocol dictated that the premier wait till India sent its external affairs minister to Kathmandu first and New Delhi had to delay S M Krishna's trip from March to April 20-22 as Khanal struggled to expand his cabinet and it was feared that an early visit by the Indian minister would be construed as India's attempt to intervene. 

Now with the budget session starting in Nepal from May 2, the chance of Khanal finding time to call on his southern neighbour in May has become very slender. After the Istanbul conference, only a fortnight will remain for the government to unveil a new constitution. The possibilities of the Khanal government being able to promulgate a new statute by May are remote and the PM has already been hinting at extending the term of parliament yet a second time. 

However, the attempt could trigger protests by the opposition parties, creating a volatile situation. On Tuesday, three Terai parties under the umbrella of the Samyukta Loktantik Madhesi Morcha fired a salvo, warning the Khanal government they would oppose any extension bid. Also opposing any further extension of the constitutional deadline is the royalist Rastriya Prajatantra Party-Nepal, that is calling for fresh elections. 

The Maoists, though Khanal's ally in the ruling alliance, have also said they would start public campaigns soon after May Day. With Maoist chief Pushpa Kamal Dahal Prachanda now turning back on a fresh revolution and mooting focusing on peace and te new constitution but his deputy, the radical MOhan Vaidya calling for a "People's Revolution in May, all eyes are on the largest party to see which path it decides to follow. The Maoist leadership has begun debating the two differeing courses of action and things will be clearer only after the meeting is over.


@ The Times of India

CHINA'S 'TERRORIST' HARVARD PROFESSOR TO BE TIBETAN PM 

[The chief election commissioner of Tibet government-in-exile Jampal Choesang announced the result- Dr Sangay got 27021 votes and 55% vote share out of a total of 49184 votes polled in the March 20 election across the globe. Voting for the prime minister took place in around 90 countries with India, Nepal, Bhutan, Europe and US having the largest number of voters.]

By Sanjay Sharma,

Lobsang Sangay

MCLEODGANJ: An India-born 43-year-old Harvard Law School associate professor Dr Lobsang Sangay, whom China has dubbed as a "terrorist", was elected as the prime minister of Tibetan government-in-exile on Wednesday. Sangay may have to shoulder most of the responsibilities the Dalai Lama is abdicating.

A section of Tibetans feels Sangay could be effective as he comes from the same school as the US president Barack Obama and has a massive network of contacts to push the Tibetan cause.

The chief election commissioner of Tibet government-in-exile Jampal Choesang announced the result- Dr Sangay got 27021 votes and 55% vote share out of a total of 49184 votes polled in the March 20 election across the globe. Voting for the prime minister took place in around 90 countries with India, Nepal, Bhutan, Europe and US having the largest number of voters.

Sangay defeated his nearest rival Tenzin Namgyal Tethong by around 8500 votes. Tethong got 18,405 votes and the third candidate Tashi Wangdi got 3173 votes.

Sangay had been maintaining his lead of around 10,000 votes since primaries were held in October. One of the MPs said Sangay was the only candidate who went to almost all major polling stations. His campaign was more organized.

The CEC said that due to the pressure from the Chinese, 13941 voters in Nepal could not vote. However, the voters in Bhutan could exercise their franchise.

The new prime minister will replace a scholar professor Samdhong Rimpoche who has completed his two terms of five years each. The prime minister-elect is still in the USA and may reach India in May to get a briefing from senior leaders. He will officially take over on August 15, a day after the present PM's term ends.

Realising his responsibility, Dr Sangay has already started networking through his Harvard contacts. However, Sangay's election may affect the redrafting of the Tibetan constitution forced due to the Dalai Lama relinquishing his temporal responsibilities. A lot of them are likely to be taken by Sangay.

Election for 43 seats of the parliament were also announced. The new House will be formed from May 30.

Sangay was born on March 10, 1968 at Darjeeling. He did his early schooling at the hill station and did his law graduation and post graduation from Delhi University before moving for doctoral studies to Harvard. He has been holding international conferences involving Chinese expatriates on the issue of Tibet.

@ The Times of India