Hyderabad: Minister for Indira Kranthi Patham and Self Help Groups Sunitha Lakshma Reddy on Monday admitted that the plight of poor borrowers remains unchanged even after the promulgation of an Ordinance and later a Legislation passed in the state Assembly to check the activities of the Microfinance Institutions.
“Their plight remains unchanged due to the heavy interest component charged by the MFIs on the loans they have taken from them, despite the measures taken by the state government,” Ms Lakshma Reddy told media persons at the state Secretariat on Monday.
She also admitted that the poor in Andhra Pradesh continue to reel under the impact of the heavy interest component charge on the loans by the MFIs even though in other states, the scheme was well received.
The Ministers words come at a time where it is generally felt that the Ordinance and the Legislation have failed to make any difference.
Ironically, a three-day international summit on Microfinance is scheduled to be held at the MCR Institute of HRD here from June 20. The international summit is expected to examine, among others, the ‘question what went wrong with Microfinance’.
The cited subject is posed as a formidable challenge to the summit participants who are expected to discuss the issue with ‘grave concern’.
The commercialisation of MFIs has also mired many poor families into a debt trap.
This has led to intense debate globally as to why the original purpose of microfinance was being relegated to a reprehensible position.
The conveners are also concerned as to how the programme could be put on the development track to suit the requirements of the borrowers from the Self-Help Groups.
The World Bank community driven Indira Kranthi Patham, with 110 lakh families, has regrouped under about 10 lakh SHGs, thus making it as one of the largest Microfinance schemes.
Ms Lakshma Reddy, detailing the media, informed that success stories of SHGs would be show cased at the proposed international summit. She pointed out at Rs 7500 crore was reportedly lent to the SHG borrowers and confirmed that Rs 9000 crore (Rs 7500 crore plus interest) was the MFIs’ turnover.
The Minister also admitted that it was a formidable challenge which requires to be viewed realistically for finding a solution. She expressed the hope the ensuing summit would help solve the issue.(INN)