More than 500 delegates and observers of the All India Democratic Women’s Association, the largest women’s organisation in the country with more than 10 million members, held the Government of India, Reserve Bank of India, and Microfinance Institutions (including MFIs, NBFCs, SFBs, and Private Sector Banks) responsible for the rising indebtedness of women. The charges were based on the findings of a survey of 9,000 women borrowers who have taken loans from non-public sector institutions, in 26 states and 100 districts. They highlighted that the women borrowers of the country face harassment, including sexual harassment, displacement, loss of property, and are sometimes driven to suicide because of the debt traps that are set by these organisations.
Charges against the central government
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Government’s pro-corporate policies have increased unemployment and economic distress, leading women and their families into indebtedness. Falling expenditure on education, health, and employment generation has forced women to take individual/group loans for their needs.
The AIDWA survey shows that a majority of the women borrowers have a family income of less than Rs. 10,000 per month. A considerable number of them in states like Haryana, Bihar, and UP, among others, reported income below Rs. 5,000 per month. Occupationally, the sample is dominated by casual, agricultural, and domestic wage workers, who can be classified as weaker sections of society. The Government’s much-publicised welfare schemes have not reached them.
The survey shows that across all states there are three major reasons for which loans are being taken: education, health, and housing. Women borrowers across states reported that though they possess BPL cards, they have not got assistance through scholarships, the Ayushman Bharat Scheme, or any housing scheme to ease their burden. In fact, the CMIE data of 2024 show that the number of small borrowers who needed to take loans for daily consumption had gone up by 5.8 percent between 2019 and 2023–24.
Corporates get support, not the poor
Whereas the corporates get Viability Gap Fund, Production Linked Incentive, tax rebates, and loans at cheap rates of interest, the poor do not have access to employment, education, and formal credit, forcing them to go to loan sharks and remain indebted forever.
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Even though the number of small women borrowers is increasing, their access to loans from public sector banks is declining because of the policy emphasis on privatisation of the banking sector and promotion of MFIs/NBFCs/SFBs.
The survey shows that in some states close to one-third of the women had to turn to MFIs/NBFCs/SFBs because public sector banks refused to give them loans. Public sector banks have been incentivised to partner with corporate financers to reach microfinance borrowers through priority sector loans and co-lending models. Further, the combined share of public sector banks and rural regional banks was less than 10 percent in the case of loans up to Rs. 50,000; whereas private sector banks like Bandhan and IndusInd Bank accounted for more than 50 percent. Hence schemes like MUDRA and NRLM have been used to further the interests of financial sharks who are swallowing up the savings of women. The government has also abandoned the DAY-National Urban Livelihood Mission (NULM) schemes. -
Robbing women of their savings to benefit corporates and MFI-NBFCs
As per the latest RBI data, small savings accounts form the bulk of the deposits in public sector banks. Of these, 99 crore women have deposits of about Rs. 44 lakh crore, which is about 20 percent of the deposits. The average savings of every woman is about Rs. 45,000. The total individual household savings make up almost 90 percent of all savings in public sector banks. These savings are then used to lend money to others.
In 1972, bank loans below Rs. 2 lakh constituted 90 percent of the lending; today this percentage has come down to less than 7 percent. Loans above Rs. 100 crore constitute about 23 percent of the entire credit, showing that these banks use small savings to give loans to rich businesses.
As of 31 March 2025, scheduled commercial banks were lending almost Rs. 187 lakh crore to others; of this, 60 percent is given to NBFCs for onward lending to women.
Further, the RBI data also shows that as of 31 March 2024, 464 corporate sector borrowers (or less than 0.3 percent) pay interest rates of less than 5 percent. The MFI-NBFCs get loans at 9–11 percent and lend to women at 22–26 percent interest and more. In this way, women are robbed of their savings and are forced to take loans at high interest rates.
CHARGES AGAINST RESERVE BANK OF INDIA
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Deregulating Microfinance Sector
The Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022, are tilted towards profiteering by the NBFC-MFIs by lifting ceilings on high interest rates.
The guidelines make NBFC-MFIs Self-Regulatory Organisations (SROs) without creating monitoring or grievance redressal mechanisms. -
Bringing NBFCs-MFIs under Priority Sector Lending to Support Profiteering
The RBI’s Master Directions on Priority Sector Lending, 2025 classify all agencies, including NBFCs-MFIs and payment banks, as those who can avail benefits under priority sector lending. Microfinance and loans to SHG/JLG are classed as loans to ‘weaker sections’, who are meant to make up 12 percent of all priority sector lending.
This enables them to get bank loans at 7–12 percent. The total loans to NBFCs-MFIs by public sector banks went up by 74 percent between 2021 and 2024.
Since the NBFCs-MFIs lend to women at about 22–26 percent interest rates and more, priority sector classification helps these corporate lenders rather than the women. As the survey shows, at least a third to half the women in different states have to take loans to repay existing debts, putting them into debt traps. -
Weakening SHG-Bank Linkage Programme by Allowing Co-Lending
In 2018, the RBI allowed MFIs-NBFCs to become co-lending partners of public and private sector banks. This meant that public sector banks were not forced to expand their infrastructure and staff. They began lending money to NBFCs-MFIs and SFBs to expand their microfinance operations. Even Adani Capital has co-lending agreements with public banks.
CHARGES AGAINST MICROFINANCE INSTITUTIONS (NBFC, MFI, Fintechs, and SFB)
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Violating the Master Directions (2022) of RBI Regarding Terms of Loans
The RBI guidelines define microfinance loans as ‘collateral-free loans’, but the survey shows that at least 30–50 percent of the borrowers across states have kept either house documents/gold/land documents, etc. as collateral for taking loans.
The RBI guidelines state that before loan contracts are signed the borrower should be given a Key Fact Statement (KFS). The survey found that 40–60 percent of the women borrowers in different states were unaware of the interest rates. Though women had passbooks, these passbooks were only given once the loan contracts were signed. -
Violating RBI Guidelines (2022) Regarding Recovery Practices
The RBI guidelines state that the borrowers should be made aware of the recovery process before loans are given. Almost no borrower had prior information about the recovery process.
The RBI guidelines forbid the use of harsh language and verbal abuse. The AIDWA survey shows that more than 50–60 percent of the women across all states face continuous verbal harassment and abuse when they encounter MFI agents.
The RBI guidelines forbid the use of physical violence and assault. However, during the collection of survey data, several instances of violence, assault, and forceful recovery have come to light. Many of them were highlighted in the testimonies.
Abetting Suicides Due to Debt Traps
According to NCRB, 671 women committed suicide due to indebtedness in 2022. Every suicide and cause are not reported to NCRB. Media reports have also shown that debt traps arising out of high interest rates have led to suicides in different states.
The Public Hearing had Jus. Madan B. Lokur, retired judge of the Supreme Court, Prof. Prabhat Patnaik, Professor Emeritus, Dr. Thomas Franco, Former General Secretary, All India Bank Officers Confederation, Mrs. Pamela Philippose, Senior Journalist, and Adv. Kirti Singh, Supreme Court, as juries. They broadly agreed with the charge sheet, listened to the testimonies, and gave a verdict which highlighted the obligations of the Union Government and the Reserve Bank of India. They also endorsed the demands and added a few more. The jury highlighted that microcredit alone cannot end poverty and the state should provide education, health, food security, employment, and other social securities as envisaged in the Constitution. The ultimate remedy suggested by many is a massive struggle to bring equity, equality, and social security to all. (Jury’s verdict in the next)
Thomas Franco is the former General Secretary of the All India Bank Officers’ Confederation and a Steering Committee Member at the Global Labour University.
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