HC moved for RBI probe into alleged unfair MFI practices

A petition has been filed in the Madras High Court Bench here seeking a direction to Reserve Bank of India to investigate into allegations that Micro Financing Institutions (MFIs) in Tamil Nadu were indulging in unfair and illegal practices in disbursement of funds to women members of self-help groups (SHGs).

The petition by All-India Democratic Women's Association state General Secretary U Vasuki also wanted the RBI to evolve a redressal mechanism in order to enable the affected SHG members get justice.
She also urged the court to direct the police to register complaints made by SHGs against the MFIs who indulged in charging exhorbitant rate of interest and resorted to unfair and illegal trade practices under Tamilnadu Prohibition of Charging Exhorbitant Interest Act 2003.
Vasuki sumbitted that SHG women all over the state were caught in a "death/debt trap" after the banks, playing primary role in successful functioning of the groups by providing funds, slowly started disbursing the loans through legally formed institutions in the form of NGOs.
However, a new breed of shylockian and profiteering companies have started storming the SHG market under the banner of MFIs.
The original concept of micro finance which aimed at social mobilisation of poor, skill development and capital formation had been had been destroyed now, she submitted.
She said "goondas" of MFIs were using abusive and threatening language against the women members to collect repayment.
She said that according to information available to her ten women had committed suicide due to the "harassment" of the MFIs in Vellore region.