Nithya J. (ed.), Guérin Isabelle (ed.), Venkatasubramanian G. (ed.), Ramesh B.R. (ed.), Michiels S. (ed.), Kartikeyan R. (ed.), Raja V. (ed.), Natarajan N. (ed.), Guermond V. (ed.), Brickell K. (ed.). (2024). Microfinance, debt distress and data capture : evidence from pandemic times in rural South India.
Pondichéry (IND) ; Marseille (FRA) ; Londres : IFP ; IRD ; King's College, 49 p. multigr.
Auteurs
Nithya J., Guérin Isabelle (ed.), Venkatasubramanian G., Ramesh B.R., Michiels S., Kartikeyan R., Raja V., Natarajan N., Guermond V., Brickell K.
In India, the economic disruptions caused by the COVID-19 pandemic have highlighted the conflict of interests involved in commercialised microfinance, as well as the limits of state-subsidised micro-credit provisioning through self-help group (SHG) collectives, both of which failed to protect poor women during this crisis. Our research on these two forms of micro-lending, carried out over the two-year period following March 2020, has documented the impact of the pandemic on different stakeholders and at different scales. ocating our in-depth study of three rural sites in Tamil Nadu, South India, in the broader landscape of microcredit, we analyse policy measures and discourses ranging from the global to the national and sub-national state, and discuss their impact on the lives of low-income women. Our sector-level analysis, together with our village-level data, force us to challenge claims that India's financial inclusion infrastructure was an effective channel for aid during the pandemic. We demonstrate that the stresses on poor women were exacerbated by their outstanding debts to microfinance providers (MFPs), the latter having made it clear that they were unable to offer their clients any monetary support, even in the form of additional credit, since they were prioritising maintaining their own financial viability. Although they did offer the state-mandated moratorium during this period, they continued to levy interest on outstanding loan amounts, thus safeguarding their own earnings while increasing the cost of loans for borrowers. In the months that followed, MFPs themselves received subsidised loans and concessions from the state, and wrote off loans in their own books; but this didn't translate to loan waivers for clients. With interest accumulating at two per cent per month, women whose livelihoods were already severely impacted by the pandemic were left with high repayments pending to MFPs. The credit bureau linkage of MFP loans meant that these women were barred from accessing new loans by all formal lenders, effectively meaning the widespread gendered financial exclusion of the most vulnerable. here was also a state promise of large-scale aid, intended to be routed through the self-help group (SHG) network that exists alongside commercial microfinance, by lifting the lending cap on group loans. We show, however, that this was never operationalised. Indeed, even if it had it been implemented, it would have been ineffective, as most groups were not yet eligible even for the existing upper-limit loan amount. The credit would also have been inaccessible to those most impacted by the pandemic-related lockdowns, as a result of the exclusionary way the SHG network has spread. To fully understand developments during the pandemic, it is essential to keep in mind the way microfinance provisioning and self-help group models were working prior to its onset: we must understand whom they included and excluded, the rates at which they lent and the terms of their loans, and their relationship to other forms of debt and credit. In our study villages, as elsewhere, low-caste and lower-class households were more likely be MFP borrowers but also less likely to be SHG members; therefore the negative impact on them of MFP loans was higher, and they would have been less likely to benefit from aid to SHGs. We ask whether there were ways in which the stresses caused as a result of inclusion in microcredit infrastructures, which provide women with access to formal finance, could have been minimised during the pandemic. Further, we ask what it would have looked like if these infrastructures had in fact functioned to alleviate the distress experienced at this time. Finally, we argue that the extensive reforms to state policy for the microfinance sector, passed in order to aid recovery from the pandemic, that have come into effect April 2022, have been biased towards protecting lending institutions and investors at the expense of the women to whom they lend. We outline specific ways in which these policy changes have worsened, rather than improved, the position of borrowers relative to lending institutions, making them more vulnerable in future crises. We call for a dramatic re-imagining of gendered financial inclusion that re-evaluates its objectives, reconsiders the interests and priorities of stakeholders, re-thinks the terms of lending, restructures models of delivery, and changes the nature of the work done by employees. The process of doing this, we propose, must be informed by careful consideration of the social, political, and financial landscapes in which recipients of loans are embedded.
