As the Indian microfinance industry goes through operational and regulatory change due to the crisis in Andhra Pradesh last year, a new model of microloan collection is emerging. As a strategy of eliminating coercive loan collection practices in an industry dominated by male agents, microfinance institutions are instead employing women as microloan collectors. The strategy so far seems to be working as women are better able to interact with borrowers and do not submit to abusive or cervices collection processes. Though they are not always taken seriously, women collection agents may have a greater ability to overcome cultural barriers such as interacting with women in Muslim communities.
HYDERABAD/MUMBAI: Beleaguered microfinance industry is turning to women power to lift it out of the depths. The fairer sex is increasingly occupying the rank and file of recovery agents of lenders to the poor as the industry attempts to restore its past glory after charges of molestation and browbeating made it an unwanted child. “We will push the MFIs to have more women on rolls once the industry, currently in fire fighting mode, comes back to some kind of normalcy,” said Alok Prasad, CEO, Microfinance Institutions Network, an industry lobby group.
“Imbalances need to be addressed to ensure more balanced gender dynamics, which should in turn offer positive results.” Twenty seven-year-old Susheela is one of them. She didn’t know in 2009 that she can succeed in a male-dominated microfinance recovery agents’ force when she quit a children’s rights organisation to join microfinance firm Basix. Today, she is one of those successful ones, though significantly minority , who are most sought after.
“Being a female, I am able to gel well with women borrowers and gender does offer an advantage in the changed scenario,” says Susheela, a graduate in economics, history and political science. The preference for women agents is largely due to a view that domination of loan recovery operations by male agents was the key factor that led to the state blaming the entire industry for becoming a bully.
The Andhra Pradesh government termed it as “no holds barred, cruel, barbarous recovery” practices by MFIs. “The coercive recovery methods include abusing and insulting , manhandling, molesting , making defaulters stand in the sun, taking away cooking utensils, TV or such other objects, leading to untold misery , resulting in suicides. This distress has led to a spate of suicides in the recent past. There are cases forcing women into prostitution to repay loans,” it said in a report to RBI.
The microfinance industry plunged into crisis after the AP government promulgated an Act to rein in microfinance institutions in October last year. The AP Act prohibits MFIs from collecting weekly repayments , extending loans or meeting women borrowers at their doorsteps and makes it mandatory to obtain government approvals for every second loan to a borrower, among other restrictions.
“Male recovery agents are typically not entertained in the Muslim populated areas and being a female, I am able to perfectly mingle with women borrowers and the response is encouraging,” said 39-yearold Padma, a livelihood service advisor, or recovery agent, with Basix, operating in Muslim-dominated areas of Hyderabad. The state accounts for more than a third of the Indian microfinance industry , now estimated at more than Rs 30,000 crore.
But past experiences show it may not be the panacea for MFI ills. Padmaja Reddy G, Spandana’s MD, said the model of hiring women recovery agents could not work successfully owing to working hour constraints. “Also female credit assistants are not taken seriously by women borrowers,” said Reddy.