Women demand basic dignity, access to credit and monitoring micro finance by States

The National Public Hearing on Rising Indebtedness of Women and MFI Loot, convened by the All India Democratic Women’s Association, on 23-24 August 2025 at New Delhi highlighted the failure of the Government of India and the Reserve Bank of India in curbing the growing power and malpractices of NBFC-MFIs, SFBs and Private Banks. The main demands placed in the Public Hearing are:

TO CENTRAL GOVERNMENT

As the Constitution provides for equality, economic justice and right to life, which is interpreted as right to live with dignity, the following were the gist of demands to the Union Government.

1. Increasing Budgetary Expenditure on Social Sector Schemes to address Root Cause of Indebtedness: Economic distress, lack of livelihood opportunities and need to borrow for education, health and housing seem to be the main reasons for indebtedness. Hence budgetary support for social sector schemes should be many times more.

2. No private players should be allowed to lend in MUDRA and DAY-NRLM schemes. DAY-NULM, which has been abandoned, has to be revived immediately.

3. Centrally Sponsored Microfinance Guarantee Scheme that ensures that indebted women repay back their outstanding loans with no more than 4 percent interest has to be put in place.

4. Increase Interest Rate on Savings Bank Accounts and Fixed Deposits. The RBI Governor has lamented that household savings are going down steadily. This is mainly due to reduction of interest rate from 5% to 2–2.5% on SB accounts and Fixed Deposit Interest from one time high of 18% to 6–6.5%. The Union Government has to intervene in this.

5. Right to Credit should be enacted in the Parliament. Due to lack of credit from Public Sector Banks, small borrowers and micro enterprises are sent to loan sharks.

6. Stop Privatisation of Banks, Expand the SHG-Bank Linkage Programme: Instead of promoting co-lending and business correspondent models, which expose women to corporate financial sharks, the government should invest in tripling bank staff and expanding branches of public sector banks. NABARD should be revitalized and funded by RBI profits as originally envisaged.

7. Create Women’s Cell in Every PSB Branch: In order to facilitate affordable loans to women, create a women’s desk for micro credit in every branch. No woman should be refused a loan below Rs 5 lakhs without collateral.

8. Make Housing loans available to all. The present guidelines for housing loans including PM Awaas Yojana are excluding people in various ways from getting housing loans and they are forced to go to NBFCs.

9. Stop funding of NBFCs and MFIs by Public Sector Banks. Banks are not supposed to lend to agencies for on-lending. The interest rate charged by banks is around 10%, whereas there is no ceiling on interest rates charged by NBFCs and MFIs.

10. Stop allowing Corporates to have NBFCs. RBI has been careful in not allowing corporates to run banks. But they have now permitted corporates including Ambani, Adani and others to start NBFCs. This has to be stopped.

11. Microfinance Fund for Rehabilitation in Cases of Suicides and Loss of Property: Special assistance and compensation need to be provided to families where women have committed suicides because of indebtedness.

12. Draft a Microfinance Development and Regulation Bill with Explicit Protection for Women Borrowers: Such a law should be enacted by States through wide consultation, especially with women’s organisations, non-profit SHG federations, trade unions etc., as lending is a State subject. The Draft Bill to Curb Unregulated Lending Activities (BULA), which will affect SHGs and support NBFCs, should be withdrawn.

13. Grievance Redressal Mechanism and Fast Track Lok Adalats: In order to deal with the unfair practices of NBFCs-MFIs and other microlending organisations, a grievance redressal mechanism should be created from block to national level. The mechanism should be headed by a representative of a women’s organisation and have representatives from SHG federations, trade unions etc. National Legal Services Authority units across the country should provide legal aid free for affected women.

TO RESERVE BANK OF INDIA

• The RBI has been mandated to regulate credit, interest rates and monitor banks under RBI Act and Banking Regulation Act. Hence it should:
• Stop Public Sector Banks from giving cheap loans to NBFCs-MFIs and fix targets for direct lending under micro credit; provide financial literacy to all women.
• Put ceiling on interest rates charged by NBFCs-MFI.
• Remove NBFCs-MFIs from the purview of Priority Sector Lending (PSL).
• Replace the Master Directions of 2022 on Microfinance with stricter regulation.
• Make rules for ex gratia payment and rehabilitation in case of suicides due to harassment.
• Prosecute NBFC-MFIs for coercive practices and extortions: The verbal and physical abuse perpetrated by the NBFC-MFIs and their agents should be criminally prosecuted, and permissions for microlending should be rescinded if repeated violations occur. States should be asked to monitor this.

TO STATE GOVERNMENTS

India is a Union of States and under federal guidelines, money lending is a State subject. Hence:

• Right to Regulate Interest Rates: State legislatures can designate NBFCs-MFIs as ‘money lenders’ and regulate their interest rates.
• Include NBFCs-MFIs in legislation regulating moneylending.
• Prosecute banks, NBFCs-MFIs for harassment and abetting suicides.
• Increase budgetary support for interest subvention and low-interest credit.
• Grievance Redressal Mechanism: States should clearly identify agencies or create one at every block level for addressing grievances related to microfinance, coercive recovery, as well as exorbitant interest and service charges.

TO BANK UNIONS AND ASSOCIATIONS

Trade unions are not only for demanding the rights of their members. They have a larger role in uplifting the masses. Hence,

• Start support cells for assisting women.
• Conduct awareness programs for women on available lending schemes without collateral.

To press for these genuine demands, All India Democratic Women’s Association has announced a plan to mobilise women across the country along with other women’s organisations and trade unions in various forms of struggles. The political parties genuinely interested in upholding the Constitution, equity and equality should come forward and announce that they will implement these demands.

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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