SHRC seeks report on loan sharks targeting tribals

Tue 05th Oct 2010 07:07 AM
SHRC seeks report on loan sharks targeting tribals
SHRC seeks report on loan sharks targeting tribals

The State Human Rights Commission on Tuesday issued notices to four District Collectors and Superintendents of Police directing them to submit a comprehensive report on the exploitation and harassment of micro finance institutions in tribal areas.

According to sources, the Commission, taking Suo Motu notice against exploitation of tribals and farmers and luring them into taking loans at hefty interest rates, directed the Warangal, Anantapur, Karimnagar and Rangareddy district Collectors and Superintendents of Police to submit a comprehensive report on the affairs of micro finance institutions (MFIs).


Taking serious note on farmers committing suicides after being unable to repay their loans, the Commission asked the officials to submit their report within 15 days.

According to sources, the MFIs are having a free run in the tribal areas and targeting illiterate women, throwing all rules and regulations to winds.

The MFIs are carrying out their business and pushing tribals into debt trap in violation of the AP Scheduled Area Money Lenders Regulation 1960, claim NGOs working with Tribals.

According to the Regulation, no person or institution can carry on business of money lending in Scheduled Area unless they obtain a license.

Expressing serious concern, Khammam Collector V Usharani had written a letter to the government in February 2010 explaining the murky financial transactions of these MFIs.

She had mentioned that these MFIs had obtained certificate of registration from the Reserve Bank of India to carry on the business of microcredit advances, lending money for agriculture, industries and market linkage developments.

They were working in Scheduled Areas by lending money and completely defeating the concept of Indira Kranthi Patham (IKP).

“Their method of extending loans to the groups with small interests looks apparently simple, but is accumulating to compound interest as the term of repayment is weekly basis and coercive methods applied to recovery on the tribals amounted to harassment,” the Collector had said.

“The innocent tribal families are taken easily in to the lap of these agencies and ultimately become bankrupt unable to repay the loans. Due to the coercive recovery methods, certain borrowers have committed suicide,” she noted. She said a huge amount of bank loans are pending forcing the bankers to refuse loans to the IKP groups.

She pointed out that loans were given to tribals in the scheduled areas against security of movable and immovable property where the Land Transfer Regulation 1959 is in force. She accused the MFIs of working against the Agency laws.