“We cannot repay the dues even if the interest rate is reduced as we paid huge sums on interest till last year.”
This is how Ms Lakshmi (name changed), a client of SKS Microfin from Pagidipalli village near Bhongir in Andhra Pradesh, reacted when asked about the repayment of her old loans.
Desperate mfis
Desperate to collect dues of nearly Rs 7,000 crore which were held up with the clients for almost a year, the microfinance institutions (MFIs) in Andhra Pradesh have now doubled efforts to get back their money.
There are many clients of various MFIs - who have loan dues amounting up to over Rs 40,000 to different MFIs — who insist that they did not have the capacity to repay.
“Of late, the MFI staff are coming to us asking us to repay loans with added interest for one year,” Ms K. Jhansi, a group leader of self-help group (SHG) women of Jawahar Nagar in Warangal, said.
“We are being told that we would get letters from courts if the dues are not paid.
“But most of us think that we had already repaid in the form of high interests,” she said.
Ms Padma from Pagidipalli in Nalgonda district said some amount was being collected on the promise of a new loan which was not being honoured later.
Almost written-off
The Managing Director of a leading MFI said: “We are thinking that the amount is almost lost for us and an attempt is being made to collect at least some dues.
“On the balance sheet, most of the dues are already being written off.”
The microfinance institutions net work (MFIN) is, however, asking the Government to facilitate meetings with SHG federations.
“They made a presentation to us saying that about 10 per cent reduction in interest could be offered on the loan dues (as against the existing rate of 26 per cent),” Mr Reddy Subrahmanyam, Principal Secretary, Department of Rural Development, Government of Andhra Pradesh, said.
But, there was ‘no clarity' on the execution of this offer.
“We asked them to show a transparent executing agency which can implement this,” he added.