This report on CSES study was published in The Hindu on 17.11.2019
32% of them have monthly debt exceeding income
Of the 88% households found to be indebted in a survey of rural households falling Below the Poverty Line in the State, 32% were found to be over-indebted with monthly loan repayments exceeding their income.
The burden of credit fell mostly on women, with the number of loans in the name of a female member being 2.5 times that in the name of male number in the 540 households with pink and yellow ration cards.
In the survey conducted between May and July, rural households complained of irregular employment and income, pointing to a poor economic situation, said Aswathi Rebecca Asok, who was part of the research team from the Kochi-based Centre for Socio-Economic and Environmental Studies.
Reliance on private microfinance institutions has gained momentum with around 25 MFIs functioning even in smaller areas like Kodungalloor, she said. As many as 120 households relied on group loans provided by MFIs to women.
“Though as per RBI guidelines, a woman can take loans only from two MFIs at a time, we met women who had taken loans from six or seven MFIs at the same time,” Ms. Aswathi said, pointing to the lack of monitoring of MFIs.
Though the loans are in their name, 50% of women respondents said they had little power over spending the money, with spouses or children making spending decisions, Ms. Aswathi said.
The affinity towards MFIs can be explained by the ease of process – loans are offered without collateral.
“Though MFIs charge high interest rates of around 25%, peer pressure on group loans ensures that their recovery rate is 97%. The recovery rate for cooperative institution loans is only 10% to 25%. MFIs reap the benefits of both high recovery and interest rates,” she said.
Although Kudumbashree groups could expand the income base for women, only 12% of members met during the survey said that their groups are involved in income-generating activities.