Swimming with loan sharks

Location IconMadurai district, Tamil Nadu

During the first wave of COVID-19, the Reserve Bank of India (RBI) issued instructions to all financial institutions stating that they should not force people to repay their debts. As people continued to find it difficult to meet their basic needs during the second wave of the pandemic, the RBI extended its loan moratorium for a second time. But these extensions have barely made a dent in the lives of people from economically disadvantaged communities, who borrow from a variety of institutions, both formal and informal. Many financial institutions are forcing people to repay the debt. In some cases, they are even threatening families, as we heard on Mobile Vaani participatory media platforms from Madurai district. 

A woman listener on the Namma Kural (Our Voice) platform says, “People from the loan agencies are coming to our house daily and asking us to repay the loan. They say that they will continue to badger us to pay up, and that they will wait outside our house until we pay, even if it gets late in the day. During this lockdown, we are staying at home with our children. The government tells us that to stay alive we need to stay home, but how can we manage [without work]? It has been really difficult to run the household. We are getting only one day of work under MNREGA. With this being the situation, the loan agencies are coming to our homes and forcing us to repay the loan, making us feel ashamed. The government should help us.”

This issue has been widely reported across the state. A few district collectors have issued warnings to financial institutions, asking them to not force people to repay debt—to no avail.

Another listener explains how these institutions are pressuring them during the pandemic. “I have two children. It is very difficult for us to run the family. We are not able to go to work. Only if we work can we repay the debt. My husband fell down and broke his hand two months back. Now he cannot go to work. I am the only earning person now, but now in this corona situation, even I cannot go to work. But people are forcing us to repay the debt. How can we repay it now when we are struggling for food?”

Gram Vaani is a social tech company that was incubated out of IIT Delhi in 2009, with the intent of reversing the flow of information, that is, to make it bottom-up instead of top-down.

Know more: Read about how social welfare schemes can be reinforced to withstand crises.

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