Orissa Agricultural loans: Micro Finance, mega bucks
A debt-ridden tenant farmer Ratnakar Jena of Andara village in Kendrapara district of Orissa committed suicide by consuming insecticide last month. The victim was landless and had taken loan from a local Micro Finance Institution (MFI) to cultivate the land he had taken on agreement. But a poor crop rendered him unable to pay back the loan in the stipulated time. A high rate of interest made the situation worse. And then there was pressure on the poor fellow from the MFI to repay the amount. In these circumstances, Jena had little choice and he chose the easiest way out— he quit! This is just one of the many cases of farmer suicide in the state. Although micro credit system is considered to be a tool for poverty alleviation, but the increasing number of farmer suicides under debt burden tells a different story. It shows that instead of providing relief to farmers, the MFIs are extorting money from them! It has often been complained that many fraud co-operative banks and micro finance institutions are operating in the rural areas of the state, and as expected, they do not go by the RBI guidelines and instead charge huge interest on the money they lend.
Although MFI operations in Orissa are widespread, there are no guidelines regarding the interest rate. In this context, noted economist Santosh Mahapatra opines, “While the banks provide loans to MFIs at 13 per cent (base rate 8 per cent and charge rate 5 per cent) but these MFIs charge 28 per cent to 36 per cent from their clients, which is obviously very high.” Kailash Mishra, chief of Awareness (India) Finance Limited, a micro credit organisation, says, “When MFIs take loans from the nationalised banks at 13 to 16 per cent, they will naturally claim more than 20 per cent from their clients.”
State Finance Minister Prafulla Ghadei says that the government is taking steps to minimise the exploitation of farmers at the hands of unscrupulous financial institutions by entrusting NABARD with a larger role in agriculture sector. NABARD will be the monitoring authority for the MFIs.
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A debt-ridden tenant farmer Ratnakar Jena of Andara village in Kendrapara district of Orissa committed suicide by consuming insecticide last month. The victim was landless and had taken loan from a local Micro Finance Institution (MFI) to cultivate the land he had taken on agreement. But a poor crop rendered him unable to pay back the loan in the stipulated time. A high rate of interest made the situation worse. And then there was pressure on the poor fellow from the MFI to repay the amount. In these circumstances, Jena had little choice and he chose the easiest way out— he quit! This is just one of the many cases of farmer suicide in the state. Although micro credit system is considered to be a tool for poverty alleviation, but the increasing number of farmer suicides under debt burden tells a different story. It shows that instead of providing relief to farmers, the MFIs are extorting money from them! It has often been complained that many fraud co-operative banks and micro finance institutions are operating in the rural areas of the state, and as expected, they do not go by the RBI guidelines and instead charge huge interest on the money they lend.
Although MFI operations in Orissa are widespread, there are no guidelines regarding the interest rate. In this context, noted economist Santosh Mahapatra opines, “While the banks provide loans to MFIs at 13 per cent (base rate 8 per cent and charge rate 5 per cent) but these MFIs charge 28 per cent to 36 per cent from their clients, which is obviously very high.” Kailash Mishra, chief of Awareness (India) Finance Limited, a micro credit organisation, says, “When MFIs take loans from the nationalised banks at 13 to 16 per cent, they will naturally claim more than 20 per cent from their clients.”
State Finance Minister Prafulla Ghadei says that the government is taking steps to minimise the exploitation of farmers at the hands of unscrupulous financial institutions by entrusting NABARD with a larger role in agriculture sector. NABARD will be the monitoring authority for the MFIs.
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
GIDF Club of IIPM Lucknow Organizes Blood Donation Camp
IIPM: Indian Institute of Planning and Management
Best Colleges for Vocational Courses in India
IIPM BBA MBA Institute: Student Notice Board
INDIA'S BEST COLLEGES, INSTITUTES and UNIVERSITIES
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