Microfinance player urges govt to curb rumours about loan waivers amid Covid-19

A microfinance player on Sunday charged that some fraudulent elements are spreading rumours about loan waivers amid the coronavirus pandemic and urged the government to take action against them.

The microfinance sector has faced some new problems amidst the continuing outbreak of coronavirus and the recent lockdown caused due to it, Satya Micro Capital said in a statement.

Taking advantage of the situation, some anti-social elements are misleading people by spreading rumours about loan waivers, Satya Micro Capital Managing Director and CEO Vivek Tiwari alleged.

"Most of these unscrupulous groups take people for a ride by cleverly carrying out membership campaigns and collecting Rs 500-1,000 from the members in the name of carrying out fight or protest, or to launch agitation for debt forgiveness, while using the collected funds for their personal benefits. However, most of the people remain careful about their credit score and do not fall prey to anyone," Tiwari claimed.

He said microfinance companies have played a significant role in tackling major issues like poverty, unemployment, lack of financial self-sufficiency, digital illiteracy, declining livelihood opportunities and the huge gap between the rich and the poor, among others.

"Keeping in view the sensitivity of the issue, it has become imperative that the government must curb such fraudulent elements and take legitimate action against those who generate and encourage any kind of skepticism.

"Simultaneously, it is also advisable for the government to set up a couple of grievance redressal cells for MFIs where appropriate solutions to such issues can be provided," Satya Micro Capital said in the release.

Microfinance loans in India are offered comparatively at the lowest, cheapest and decreasing interest rate, the microfinance lender claimed.

The average lending rate for microfinance institutions in India is around 22.5 per cent. On the other hand, small institutions are also offering their financial services at an average lending rate of 24.5-25 per cent.

More than two-thirds of this rate is passed on to bank's interest and the remaining one-third goes to increased operating cost and infrastructure, while there is always scope for further reduction in this rate of interest, it added.

Satya Micro Capital has operations in 22 states, including Assam, Bihar, Uttar Pradesh and West Bengal, according to its website.