Government will waive loans taken by poor women: Himanta Biswa Sarma

With microfinance lending turning out to be an election issue in Assam, finance minister Himanta Biswa Sarma said the government will waive the loans taken by poor women.
He said that Assam Microfinance Institutions (Regulation of Moneylending) Bill, 2020, which was passed in state assembly, is awaiting the Governor’s nod.

“Once cleared by the Governor, we will start the process of negotiating with MFIs (microfinance institutions) and see how loans can be waived. The loan amount is around Rs 12,000 crore and we have to see how we can negotiate and bring the same down,” Sarma said on Monday, addressing a rally in Sasoni in Upper Assam. “The practice of taking loans following allurement has broken the social fabric in several areas and ruined many families. We are waiting for the Governor’s nod.”

The minister said the government has kept Rs 500 crore to tide over the crisis in the MFI sector and that if required it will add another Rs 500 crore. “We will waive the loans taken by poor women. We will see if the waiver can be given on principal amount or interest part. We have enacted a law whereby no agent can go to the house of a borrower and seek money. If one does it there is provision for imprisonment.”

Asking people not to take such loans, Sarma assured that the government will devise schemes for women and self-help groups and will come up with revolving funds. “Taking loans from such companies without papers increases problems. For now we are shouldering the burden of such people who have taken loans. However, in future they must be cautious,” he said.

Opposition Congress has promised waiver of loans taken from MFIs if the party is voted to power in Assam in the upcoming assembly polls. Assam saw a spate of loan defaults and stress in rural households, raising the spectre of repayment crisis that hit Andhra Pradesh in 2010.

The legislation passed by the state assembly aims to protect and relieve the economically vulnerable groups and individuals from undue hardship of interest rates and coercive means of recovery by MFIs or moneylending agencies and for creating an effective mechanism to regulate these organisations.

The legislation stipulates that lenders shall ensure that a borrower who has existing loans from not more than two lenders and the current cumulative loan outstanding of a borrower shall not exceed Rs 1.25 lakh. This limit shall also be taken into consideration in providing any existing loan with the same client from institutions regulated by the Reserve Bank of India.

For tea garden permanent labourers taking loans from MFIs, total indebtedness shall be capped at Rs 30,000 for borrowers who have a single source of income and at Rs 50,000 for borrowers who have multiple sources of income, as per the legislation.