Benjamin Franklin once said “If you would know the value of money try to borrow some”. He probably had not met the community of moneylenders who have been around for generations and are now an insolvable part of the rural economy!
Money lenders are not just ready to lend their money, but want their money back at an exorbitant rate of interest that will take away more of the available money making you borrow more!
Officially, almost half of India’s nearly 100 million farming families are in debt. Of these borrowers, almost 30 percent are said to be in debt to private moneylenders.
In India, the poor resort to risky, expensive, and inefficient methods of managing their money. Money lenders make it to the top of the list here. Money lenders are an important source of “credit” to borrowers who are refused credit by financial institutions because their income may be below the poverty threshold.
According to a recent survey village India relies more on money lenders than banks. Almost every farmer across India is a hostage, in one way or another, to the profitable big business of illegal money lending. Families have lost land, farmers have been asked to prostitute their wives to pay off debts and, when all else has failed, borrowers have killed themselves to end their misery.
Even though the government announced a loan waiver for small farmers borrowing from banks, the efficacy of the scheme is badly diluted because it leaves out those borrowing from moneylenders.
Rang De has facilitated low cost loans for a group of women with funds raised from social investors to pay off their loans from money lenders. What seemed like a quick fix for their financial problems ended up creating bigger financial troubles down the line. They will now continue paying their liabilities at smaller interest rates to Rang De.
Let us together destroy the inescapable cycle of debt that is fueling one of the worst agrarian crises facing India.
Here is another tit bit! (This is where we share with our readers some interesting bit of news related to micro financing)
In Africa, micro loans have been given to cell-phone ladies who buy a cell phone and go village to village lending out minutes on the cell phone and making a profit on that!
And it is all perfectly legal!