This refers to the report “Only Andhra govt can rectify the situation in state” (July 10). Livelihood financial services group Basix founder and chairman Vijay Mahajan is right in expressing his anguish that owing to the absence of micro-finance institutions (MFIs), borrowers in Andhra Pradesh are forced to approach money lenders who charge annual interest as high as 120 per cent against the 26 per cent that MFIs charge under the Reserve Bank of India directives. As a result of the ban, Rs 7,000 crore worth of micro-loans have turned bad in the state, giving it the dubious distinction of having the largest number of borrowers branded as defaulters in a particular geographical area in the world. Pakistan has 10 microfinance banks, and Nigeria opened 37 banks in one state on a single day in January 2013. China is also promoting microfinance, recognising it as an important element in the strategy to reduce poverty. India refuses to recognise the fact that the families below the poverty line need help to become productive components of society. What better reason than the reluctance of the authorities concerned to recognise microfinance as an important segment of the economic ecosystem?
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B Vithal Rao, Hyderabad
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201 · E-mail: letters@bsmail.in
All letters must have a postal address and telephone number