Tentacles of Debt Crisis: Understanding the Contours of a New Debt Trap
Dates: 9th to 12th December
Background
There is a credit crisis simmering across India’s countryside, and millions are at the cusp of a debt trap. In the context of dwindling income and alarmingly decelerating household savings, people are desperate for credit for their day-to-day consumption needs. This is evident in figures that suggest that loans for building assets are in fact on the downward slope while people are being forced to borrow for medical emergencies and meeting their consumption expenses. While the private sector driven by profit never had their footprint in the rural landscape, even the public sector banks have been cutting costs by curtailing their rural branches. It was to foster the financial inclusion of the marginalised that we once nationalised our banks. But we are presently following a reverse trend in our policies as we are replacing rural branches with precariously placed Banking Correspondents or Bank Mitras.
This is leaving the poor and most vulnerable particularly in rural India in the hands of modern day money lenders – Non Banking Financial Companies, commercial Microfinance Companies, Easy loan apps and gold finance companies. Even the NABARD and the RBI recognize that these agents are notorious for their exorbitant and usurious interest rates that go up to 100 and 200%. And if we look at the newspapers we will find them splattered with news of an epidemic of suicides as the vulnerable are being forced to take their lives in the face of the illegal and unethical recovery practices of these loan agents as they even breach people’s privacy and stoop to new depths to harass, initimidate and threaten people. While we are giving lakhs of crores of worth of write offs to the big corporates and wilful defaulters, the banking system has been skewed against those at the bottom as we are diluting our priority sector loans and are allowing the private money lenders to prey upon the poor.
What the Workshop seeks to achieve
The workshop will try to unpack what has led us to this Debt Trap and how banking ought to be reimagined such that access to affordable credit is defined as a basic right. For this we will start with what the purpose of banking is in a developing country like India and how nationalisation of banks and the policies that followed shaped our banking landscape away from the clutches of a few. We will thereafter look at the period of reforms and the consequent impact on the ordinary Indian’s access to credit. We will go deeper into the present predicament of a cash starved countryside and hawkish loan companies that are trying to fill the gap left by the public sector banks.
The credit crisis is a ticking time bomb. While both the RBI and NABARD is aware and taking note of the pockets of indebtedness that is being created due to unregulated operations of the private loan sharks, effective measures are not forthcoming as the policy prescription is to profit at the cost of the people. The workshop will help unpack the credit landscape and look for remedies.
The tentative schedule for the workshop is here.
Day 1
The crisis brewing:
Context to the Debt Crisis
- State of household debt and lending pattern: Findings from a short study
- Findings from the ground
- Are NBFCs the agents of financial inclusion we want?
Purpose of Banking in a Developing Nation
- Key highlights from the Advertisement of NBFCs and easy loan apps
- Key highlights of RBI’s relationship with NBFC
- Compilation of interest rates charged by NBFCs
Access to Credit: Why did we nationalize our banks
Day 2
Status of banking and access to credit pre-nationalization
- The rationale behind nationalization
- What changed after nationalization
Day 3
The reforms & the road back to the debt trap
- Rising NPAs, rising provisions, and falling credit for poor
- Leaving people unbanked
- Reading bank-related data and sources towards an analysis of the banking landscape
Activities before Day 3
- Legislation: BULA Act, Tamil Nadu & Karnataka Acts
- Access to Credit & Climate Crisis: Concrete instances
Day 4
Deepening credit crisis
- Presentation by Groups and discussion
- An analysis of BULA and state legislation against recovery practices
- How banking is serving the ones on top: lending patterns, Deposit interest rates, Recovery rates
- How the climate Crisis will only deepen the credit crisis unless banking is reimagined
- Alternative Imaginations of Banking
Who is the workshop for?
The workshop will be useful for activists, students, researchers, young bank officials, and groups to understand how the poorest and most vulnerable are being pushed into a new debt trap and are being subjected to usurious rates and inhuman recovery practices. We would interrogate over the course of the workshop how these pockets of indebtedness are a result of a skewed policy landscape that favors few. We would also discuss how the debt crisis is being exacerbated, given the climate crisis. And finally, how we need to reimagine the banking and economic landscape to effectively address the crisis.
Methodology:
The sessions will be non-technical; they’ll be taken by researchers, civil society leaders, and activists. Through a combination of expert lectures, interactive sessions, and group work, we will discuss the history, reforms, and impact of the issues related to the above-mentioned themes. Sessions will be followed by Q&A sessions and discussions.
Language: The primary medium of instruction will be in English
Resource persons:
Dipa Sinha, Thomas Franco, Anirbhan Bhattacharya, Nancy Pathak, Joe Athialy, Surajit Mazumdar, S. Krithi, and Amitanshu Verma.
Surajit Mazumdar is a professor at the Center for Economic Studies and Planning, Jawaharlal Nehru University. A leading voice in the field of political economy, his work spans industrial development, corporate concentration, labor, and the dynamics of Indian capitalism. He has written extensively on macroeconomic policy, inequality, and the evolving relationship between the state and capital in India. Professor Mazumdar combines rigorous scholarship with an unflinching focus on the social implications of economic policy, making him one of India’s most insightful critics of neoliberal reforms.
Dr. S. Krithi teaches in the Jindal School of Journalism and Communication at the O.P. Jindal Global University. She holds a PhD in economics from the Center for Economic Studies and Planning, JNU. Her areas of current research include the economics of forest restoration and mitigation policy, natural resource valuation and allocation, and women and work. In addition, she is interested in gender, politics, and economics. Her recent work involves the study of the debt crises, exploring how microfinance institutions have impacted women’s lives and livelihoods.
Amitanshu Verma is a researcher with the Center for Financial Accountability (CFA), where he critically examines how India’s financial system serves elite interests while sidelining ecology, social justice, and inclusive development. He has worked on topics such as banking practices, climate risk in infrastructure finance, and environmental and social safeguards in financial institutions. His work bridges research and public commentary, calling for transparency and accountability in finance to become central to policy and development debates—not just add-ons to them.
Dates and Venue: 9th to 12th December, Sambhaavnaa Institute, VPO Kandbari, Tehsil Palampur, District Kangra, PIN 176061, Himachal Pradesh.
How to reach: Please visit Getting to Sambhaavnaa
For any other info, WhatsApp or call 889 422 7954 (between 10 am to 5 pm), and e-mail programs@sambhaavnaa.org.
Participant Contribution: We hope that participants would contribute an amount of Rs. 5500/- towards workshop expenses, inclusive of all on-site workshop costs: boarding, lodging, and all the materials used in the workshop. Travel of participants will have to be borne by the participants/respective organizations.
Do not let money impede your application. Need-based fee waivers are available. We have a limited number of scholarships, so please apply for a fee waiver if you really need it. Do remember that there may be others who need it more than you. The fee waiver will be offered to people from marginalized groups and non-funded social, political, or student movements.
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