Safe from the clutches of loan sharks, India’s rural women tap micro loans to become budding entrepreneurs
- Formal micro lenders have an increasing presence in rural areas where banks have limited reach or are unwilling to lend to the poor, analysts say
- Over 60 million Indian women hold small, collateral-free loans that have helped generate income and provide sustainable employment for their families
Pulling out a shirt from a shelf at her shop in Central India, Chandrawati Rajpoot recalls the sleepless nights she had after borrowing money from a loan shark – twice to pay for her sons’ college tuition and once for a medical emergency.
Unable to pay the 5 per cent daily interest on her last loan of 20,000 rupees (US$245) in 2019, she was forced to give away her gold bangles – a family heirloom – to stop the moneylender from harassing her.
“In desperate times, (loan sharks) are the only option … but they are ruthless,” said Rajpoot, 44, in her village of Narela in Madhya Pradesh state, recounting how lenders showed up at her home, shouting abuse and threats of violence.
But those days came to an end in late 2020 when she signed up for a low-cost loan programme with a group of local women, in which they act as guarantors for each other – highlighting a growing shift towards formal microfinance among Indian women.
With the help of a loan of about 30,000 rupees, Rajpoot is now the owner of a small dairy herd comprising seven cows and a buffalo, and a shop selling children’s clothing.
They earn her about 90,000 rupees a month – nearly three times what she made two years ago as a farm labourer.
Rajpoot said she was left with enough to easily pay the 1,660-rupee monthly instalment to Spandana Sphoorty Financial, a microfinance company.
