A book which has made me think a lot

I got my hands on a recenly published book based on Indian microfinance industry which went seriously wrong. We happen to know the author of the book a friend of many years. I had always been very intrigued by the  microfinance development and exponential growth in Andhra Pradesh and also how later it appeared that they did not do anything right, but caused grievous harm to the poor in the remote areas of that state. And the huge sums of money that was talked about as loans that went bad, did not make any sense to me then. So I grabbed the book before S could get hold of it.

I had been fascinated by the story of Mohammed Yunus and the small credit and self help groups. I really believed that the money lenders were the villains and these new fangled institutions were their saviours. But the book really opened my eyes to the reality. It was painful. Money lenders look like not so bad to me now.

I have lived in Rajasthan for some years as part of my work.My colleagues  have told me that all the pawn brokers in tamil nadu are from Rajasthan. Their state does not allow them to indulge in this business  and they find the environment very congenial in Tamil nadu, so a very large number of their relatives have migrated there, settled, learnt the language and are comfortable. I used to feel very bad about them then.

So in the present context I thought I should compare practices of a  typical pawn broker  to the practises of the microfinance institutions.The MFIs were chasing the customers and  thrusting loans in their hands without the need for any security. No pawn broker would do that.The customer comes to them and they pledge some item of value.The MFIs compete with each other for the same customer and disburse loans without any thought of their repaying capacity. Pawn brokers deal with clients who come to their shop and the loan will be fully secured. If loan is not repaid, the MFIs resorted to most unethical practises to shame the customer. The pawnbroker sits pretty in his shop and does not put any coersion on the client. In fact it is the client who is interested in making the repayment soon and collecting his security item. Suicides are reported when the MFIs resort to such strong arm tactics for loan recovery. Pawn brokers do not push the customers to desperate measures.

We have quite a few pawn brokers in our area and I see them thriving and mushrooming. Recently they also opened a jewellery shop in the same area. I would look darkly at that shop and think to myself, so all the gold jewellery that poor people have deposited with you, you have usurped as they have not been able to redeem the pledged jewellery. But after reading this book, I dont look at them so darkly.Yes , they are a menace, but they fill a need, not in the best way but better than the sharks that MFIs have been portrayed in this book.

I thought about the needs of the poor that push them to whatever is the source of credit. It is illness, education and fulfilling social and family festivals/rituals/weddings. The state has really withdrawn from the scene of providing affordable health  and many a time the poor are pushed to go to a private hospital and are unable to bear the heavy cost. Again the state runs schools which are not favoured by any of the maids in our area.They send their children to private schools in English medium. My maid tells me her grandchildren are picked up by a van to the neighbouring town from her remote village in tiruvannamalai district for a english medium school. And my cook has her grandchildren go for tuitions in addition to going to english medium schools in the Chennai. I asked them and they all say we will not send our children to govt schools even though now they are also offering english medium. We do not want our children to mingle with the students who come there. They also say, education is the only way to rise above in their social status.They are willing to undergo any pains to give the children a chance to fare better in life than them. So they spend a lot, really a lot on children's education whether they are in chennai or in villages.

Their social commitments are never ending. They have large families and every now and then there is an occasion for which they need to travel to their native place and also to shell out money for gifts and stuff. The social pressure is so much that they are not able to ease out of these monetary obligations which they are unable to bear. Education of girl children is perhaps a long term solution. They stand on their feet emotionally and economically, and not only that are able to think for themselves and take decisions which is in their interest. Only then can they withstand the social pressures. That also will help them to really equip themselves well before getting married. Again here, the social pressures to marry off the girls very early is really a bane.

I had wished that my maid and cook had her daughters study and lead a life better than them. But it has not happened. Now I see that their grandchildren are being given better inputs to have a better life. I really wish to see that they make the best of it and make good choices in life and get ahead economically and socially.