Microcredit Fights to Regain Credibility

Manipadma Jena – IPS – Wednesday, 12 October 2011 (originally published 09 Oct)

Women weaving baskets
Basket-weavers in Kerala, funded by microcredit. Image: ESAF/IPS

BHUBANESWAR, Oct 9, 2011 (IPS) – As microcredit institutions – once touted as the vital ‘last mile’ in extending credit to poor rural women -fight a government backlash that has encouraged honest borrowers to turn defaulters, hopes for revival hinge on a new bill awaiting passage in India’s parliament.

Far from repaying their debts, borrowers are now demanding that microfinance institutions (MFIs) pay them back for charging interest at thrice the advertised rates.

“The MFIs must refund us half of the loans that we took seven to 10 years back, because they have taken repayment twice over with interest,” says Vijaya Kasipati, 32, a woman borrower in the village of Lachapet in southern Andhra Pradesh state . . .

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