Private Financial Firms threaten to undermine self-financing initiatives of rural peasant women in South India

Karnataka, a state in Southern India, has been declared drought ridden for 11 of the past 16 years and there is still no comprehensive drought management policy in place that can take effect immediately and address rural distress.

139 out of 176 taluks¹ have been declared as being under severe drought this year (2017). Rural Karnataka is in deep distress, with farmers and farm workers suffering massive crop losses and being unable to repay loans taken for agricultural purposes. For peasant women, drought presents a double whammy.

Women make up a majority of the agricultural workforce in India and yet their identity as a farmer or farmworker remains unrecognised and their labour remains largely invisible. Land ownership among women is dismally low, affecting their access to institutional and public credit systems. In a predominantly patriarchal system, peasant women are left to bear the double burdens of managing the family and the farm.

It is in this context that self-help groups (SHG) came about as an alternative to address the problems faced by peasant women. A Self-Help Group is a group of 10-20 women, usually very poor and from the same neighbourhood, who know each other and therefore come together. They save money regularly (weekly, fortnightly, monthly) and these pooled savings become their source of credit.

The idea got a boost when it was scaled up by the Government of Karnataka, in 2000-2001, under a State run initiative called “Stree Shakti” (Women’s Power!). The stated objective of the program was to improve the financial conditions for rural women by enabling them to gain more control over their lives through access to credit. It was also aimed at imparting trainings on skills that could create livelihoods and building a community based support and monitoring system that ensured compliance.

The SHGs were linked to nationalised or public sector banks. This system enabled women to take more control over their lives, guaranteed financial independence while simultaneously fostering a sense of community, thus providing an impetus to rural economies and helping curb migration to cities.

As Farida, a peasant woman says, “what used to be individual savings earlier, in one’s own kitchen, became a community’s saving”. As of 2012², Stree Shakthi group members had saved Rs. 1118.05 crores (11 Billion Indian Rupees) since inception. 120,155 SHGs availed bank loans to the extent of Rs.1305.97 crores and have done internal lending of Rs. 3215.88 crores to take up various income generating activities.

ENTRY OF PRIVATE FINANCIAL FIRMS

Over the past decade, these SHGs have been approached by ‘private financial firms’ offering them better access to credit services if they banked with them. Their attractive offers – coupled with the lack of access to government schemes of credit for women – enabled the easy transition from nationalised banks to private ones.

One of the biggest players in the field the Shri Kshethra Dharmasthala Rural Development Project is associated with a temple, which enabled it to quickly build trust among rural populations.

Having now moved their savings, these women have been accessing credit for various reasons which include agricultural investments such as expenditure on seeds and fertilizers, educational needs, and health costs at private hospitals. Over the past few years of successive droughts, the SHGs are under strain and are unable to repay their loans. The failure of crops, lack of compensation for damaged crops, lack of a drought-management policy, absent or unsettled claims of insurance cover for – all point at a systemic neglect of the agrarian crisis, making it impossible for the women’s groups to recover and repay.

Since 2016, conditions have only worsened and private firms have been harassing peasant women in a variety of ways to recover their money. These tactics include turning up at odd hours in the night, verbally abusing women in front of others, pressurizing all the women from the SHG, locking up their houses, and so forth.

In a society that is patriarchal and conservative, these tactics put women under extreme distress. Suicides by peasant women and women farmers³ are now increasingly reported from rural Karnataka and several reports suggest the inability to repay loans⁴ as a triggering factor.

PRIVATE FIRMS OPERATING IN THE REGION

There are nearly 23 officially registered micro finance companies in Haveri district of the State of Karnataka and some of them are as follows:

1. Shri Kshethra Dharmasthala Rural Development Project

2. Gramshakti, Fullerton India

3. Grameen Koota Financial Services Pvt Ltd

4. Spandana Sphoorty Financial Limited (‘SSFL’)

5. Bharat Financial Inclusion Ltd (formerly SKS Microfinance ltd)

6. Navchetana Microfin services pvt ltd

7. Belstar Investment and Finance Private Limited (BIFPL) from Hand in Hand

8. L&T Financial services

9. Equitas Microfinance/ Equitas Holdings Limited

10. Muthoot Fincorp Mahila Mitra

Legally – these micro finance companies come under the Central Bank’s (RBI) fair practices code⁵ wherein they are not allowed to use coercive methods in loan collection and cannot engage in harassment. Staff from these organisations are mandated to engage with defaulters in a non-coercive way. Although such a code is in place, very often women are unable to reach out to concerned authorities due to several cultural and social barriers. In December 2017, Karnataka Rajya Raitha Sangha – KRRS (a member of LVC) carried out a campaign to demand a complete waiver of loans taken by farmers including the SHGs. This was a demand that was articulated especially within the context of drought and other extreme climatic events. While the tenure over which loans must be repaid has been extended owing to campaign pressure, small-farmers in the region say that it doesn’t really mean much.

On 9^th March 2017, the women’s wing of KRRS took out a protest rally in Haveri region and blocked roads. They demanded an end to harassments by the agents of the micro finance companies; asked for access to credit from public banks at 0% interest; and called for information dissemination about government schemes; apart from demanding access to such schemes; and an increase in funds made available to SHGs via nationalized banks.

On 7^th April 2017, the women’s wing met with the Deputy Collector, Haveri. Later, in a joint meeting with the women’s group and the representatives of the private firms, the Deputy Collector ordered micro finance companies to carry out their tasks as per the fair practices code and warned against any form of harassments. All financial organisations have been asked to put on hold collection of loans till January 2018. It is a significant decision that provides interim relief to affected families.

This is an edited version of a report submitted by Rashmi Munikempanna from KRRS, with additional inputs from Faridabanu, Manjula Akki, Guttyamma, Sharada – all members of KRRS women’s wing in Haveri.

Cover Image: Women in Gejjalagere village, Mandya district, apply for group loans from a micro-finance institution under the Dharmasthala Temple – Photo by Dipti Desai/Open Magazine