When Ethics Losing Out To Logics

Free Market Babies And Reproductive Tourism 
As egg sales, IVF and surrogacy become more common and commercial, a conflict arises between social justice and profit.
Donna Dickenson

Does India need a new independence struggle?

The fight this time would not be against British colonialism, but rather against the United Kingdom's approach to regulating reproductive medicine. At a time when India is considering a sort of match-making service for Western couples seeking to hire Indian surrogate mothers, the UK government has announced the abolition of two leading medical regulatory agencies.

Meanwhile, as these countries move farther down the road to free markets in reproductive medicine, France is debating all of its bioethics laws - and continuing to stand up for a different model - focused on social justice and protection of vulnerable women. There is an alternative simply to letting the market decide, the French Assembly insists.

At some point, many countries are likely to find themselves embroiled in similar debates and controversies over reproductive rights and obligations. So it is necessary to clarify what is at stake in how we regulate - or de-regulate - in vitro fertilisation (IVF), egg sales, and surrogacy.

It may come as a surprise to observers in the US, in particular, that the British approach could be considered "free market". After all, the UK forbids outright payment for eggs, whereas in the United States, a highly differentiated market has grown up around "consumer demand". And the UK has a national regulatory agency for IVF, whereas the US has a patchwork of state regulations (or a lack thereof).

But the UK's Human Fertilisation and Embryology Authority (HFEA) might not be around for much longer. Prime Minister David Cameron's government announced in July that it intended to abolish the HFEA by 2014, along with the Human Tissue Authority, which deals with non-reproductive tissues. Already, the HFEA appears to be attempting to preempt the government by softening its regulatory touch.

Last month, the HFEA finished a consultation on increasing the level of "expenses" payable for eggs used in IVF. European law forbids outright payment for eggs, but the Authority suggests that increasing "expenses" considerably would not constitute an impermissible inducement. The HFEA is merely "removing disincentives", not "creating incentives". You could be forgiven for missing the difference.

Proponents of the Assisted Reproductive Technologies Regulation Bill 2010, now before the Indian Parliament, employ a similar rhetorical twist. They say that the bill actually protects surrogate mothers - for example, by limiting the number of pregnancies they can undergo. But the law would make surrogacy contracts legally binding, requiring the mother to give up the baby even if she changes her mind.

Opponents say that the agencies making the arrangements will be the biggest winners - that the huge profits they reap will dwarf the fees paid by foreign couples to the women bearing their children. As NB Sarojini and Aastha Sharma wrote in the Indian Journal of Medical Ethics, "The Bill actively promotes medical tourism in India for reproductive purposes." 

Reproductive tourism

France, like most European countries, has a problem with reproductive tourism: a yearly shortage of about 700 egg donors sends some couples over the Pyrenees to Spain, where private IVF clinics pay providers more in "expenses" than the UK allows. Even so, the draft bill continues to prohibit payment for eggs.

And it's not just France's official ethics committee that takes an anti-commodification stance. The French have recently conducted a series of two-day meetings in several provincial cities. In Rennes, the panel debating reproductive medical issues supported the policy of not paying for eggs or sperm - not even by the back door of increasing the level of "expenses".

While the HFEA document calls for ethical concerns to be "balanced" against increasing egg supply, French Assembly members insist that law, morality, and progress are compatible. They reject the view that ethics is optional, even though some influential professors, such as Rene Frydman, who helped to create the first French IVF baby, have warned that France will fall behind in the science race unless it abandons its principles. The upper house, the Senate, was much more minded to listen to that view, so the outcome is still uncertain.

France is no Shangri-La, isolated from global markets or the pressures of international research. In the words of Emmanuel Hirsch, professor of medical ethics at the University of Paris-XI, "How long can our bioethical standards continue to resist the rise of other logics - particularly financial ones?"

To be sure, French regulation can be heavy-handed. For example, IVF is restricted to heterosexual couples who are married or in long-term relationships. The official rationale was that eggs and sperm are not commodities, but gifts from a fertile couple to an infertile one.

That is also one reason why the French restricted egg donation to women who had already had at least one baby (though this is being changed).

But the limitation to heterosexual couples was rightly condemned as homophobic by the French public in the consultations. So the draft bill has been amended to allow lesbian women to receive donated eggs. Gay men will still be barred, because they would require a surrogate, and surrogacy remains prohibited.

That sort of responsiveness to popular sentiment in the legislative process gives the lie to the canard that French regulation is inflexible and hopelessly bureaucratic. In fact, the free-market "Anglo-Saxon" attitude sounds like nothing so much as the old prejudices about the French that have been around since the novelist Thackeray told English readers: "The Frenchman has after his soup a dish of vegetables, where you have one of meat. You are a different and superior animal - a French-beating animal."

Of course, we now know that a diet of bully beef is likely to result in hardening of the arteries, whereas the vegetable-centered Mediterranean diet is much better for human health. Enough said? 

Donna Dickenson, Emeritus Professor of Medical Ethics and Humanities at the University of London, won the International Spinoza Lens Award in 2006 for contributions to public debate on ethics. Her latest book is Body Shopping: Converting Body Parts to Profit.

A version of this article was previously published on the Project Syndicate.

The views expressed in this article are the author's own and do not necessarily represent Al Jazeera's editorial policy. 

Source: AlJazeera - May 30, 2011

These Girls' Fate?

Despite Rapid Growth, India Lets Its Girls Die
By MUNEEZA NAQVI, Associated Press

MORENA, India – The room is large and airy, the stone floors clean and cool — a welcome respite from the afternoon sun. Until your eyes take in the horror that it holds. Ten severely malnourished children — nine of them girls.
The starving girls in this hospital ward include a 21-month-old with arms and legs the size of twigs and an emaciated 1-year-old with huge, vacant eyes. Without urgent medical care, most will not live to see their next birthday.
They point to a painful reality revealed in India's most recent census: Despite a booming economy and big cities full of luxury cars and glittering malls, the country is failing its girls.
Early results show India has 914 girls under age 6 for every 1,000 boys. A decade ago, many were horrified when the ratio was 927 to 1,000.
The discrimination happens through abortions of female fetuses and sheer neglect of young girls, despite years of high-profile campaigns to address the issue. So serious is the problem that it's illegal for medical personnel to reveal the gender of an unborn fetus, although evidence suggests the ban is widely circumvented.
"My mother-in-law says a boy is necessary," says Sanju, holding her severely malnourished 9-month-old daughter in her lap in the hospital. She doesn't admit to deliberately starving the girl but only shrugs her own thin shoulders when asked why her daughter is so sick.
She will try again for a son in a year or two, she says.
Part of the reason Indians favor sons is the enormous expense in marrying off girls. Families often go into debt arranging marriages and paying elaborate dowries. A boy, on the other hand, will one day bring home a bride and dowry. Hindu custom also dictates that only sons can light their parents' funeral pyres.
But it's not simply that girls are more expensive for impoverished families. The census data shows that the worst offenders are the relatively wealthy northern states of Punjab and Haryana.
In Morena, a sun-baked, largely rural district in the heart of India, the numbers are especially grim. This census showed that only 825 girls for every 1,000 boys in the district made it to their sixth birthdays, down from an already troubling 829 a decade ago.
Though abortion is allowed in India, the country banned revealing the gender of unborn fetuses in 1994 in an attempt to halt sex-selective abortions. Every few years, federal and state governments announce new incentives — from free meals to free education — to encourage people to take care of their girls.
In Morena, a Madhya Pradesh state government program offers poor families with one or two daughters a few thousand rupees (a few hundred dollars) for every few years of schooling, and more than 100,000 rupees ($2,250) when they graduate high school.
But while a handful of Indian women have attained some of the highest positions in politics and business — from late Prime Minister Indira Gandhi to Pepsi CEO Indra Nooyi — a deep-rooted cultural preference for sons remains.
Even the government has accepted that it has failed to save millions of little girls.
"Whatever measures that have been put in over the last 40 years have not had any impact," India's Home Secretary G.K. Pillai said last month when announcing the census numbers.
In Morena's homes, villages, schools and hospitals lie some of the answers to why the country keeps losing girls.
In the district hospital's maternity ward, a wrinkled old woman walks out holding a just-born girl wrapped in a dirty rag like an unwelcome present. Munni, who uses only one name, is clearly unhappy. Her daughter-in-law has just given birth to her sixth girl in 12 years of marriage.
Will the daughter-in-law go through another pregnancy?
"Everyone wants boys. A boy takes care of you in your old age," Munni says.
As a mother-in-law, Munni will likely have enormous control over her son's wife, influencing how many children she has and nudging or bullying her to bear a son.
The hospital insists it strictly obeys the law against using sonograms to reveal the gender of a fetus, says R.C. Bandil, who heads the facility. The sex ratio at birth at his hospital is as high as 940-945, he says. "Why is it 825 for the 0-6 group?" he asks.
Part of the answer lies in his own hospital's malnutrition ward.
"Women cry when they have girls," nurse Lalitha Gujar says as she spoons powdered coconut, peanuts and sesame seeds into bowls of fortified milk to nourish the tiny children.
All nine mothers of the sickly infant girls say they want sons — to look after them when they get old, because their sisters-in-law have more sons, because their mothers-in-law demand male children.
"If a woman has a boy, for a month she will be looked after. If she has a girl, she'll be back in the fields in three days," says Sudha Misra, a local social worker.
An exhausted mother who faces neglect, poor nutrition and blame for producing a daugher is likely to pass on that neglect, social workers say. For an infant, that can mean the difference between life and death.
"A malnourished child will get sick and the chances of death are very high," Bandil says.
Males get first priority. "First the husband is seated and fed, then the brothers and then whatever is left is fed to the girls," says Bandil. "If there are two mangoes in the house, first the boy will get to eat."
For the very poor, the pressures to bear sons result in mistreatment of both the baby girl and mother. And rich women are not immune to this mistreatment if they fail to bear male children.
For those with money, it's often about being able to locate a radiologist who, for a cost, will break the law and reveal the sex of the fetus, or being able to fly abroad for such tests.
A 2007 study by the rights group ActionAid India found that gender ratios were worse in urban areas, and that sex-selective abortions were more common among wealthier and higher-caste people who could afford ways to learn the gender of fetuses.
The law is not enough to combat "a society that values boys over girls," says Ravinder Kaur, a professor of sociology at New Delhi's Indian Institute of Technology.
"Laws are good because they may act as a deterrent" she says, but sex-selective abortions continue underground because "people find more devious ways."

Source: News. Yahoo - Wednesday, May 4, 2011

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Virginia Girl Found Eating Herself In Cage In Mobile Home; parents Brian and Shannon Gore Charged
By Michael Sheridan

Gloucester Sheriff's Dept.

Brian Gore, 29, and Shannon Gore, 25, face child abuse and murder charges.

 

A young girl was found caged and attempting to eat herself in a mobile home in Virginia, and cops say her parents are responsible.
The malnourished girl, believed to be either 5 or 6, was discovered in a crib that was converted into a makeshift cage after police arrived at the home in Gloucester County to investigate a burglary last week.
The girl's parents, Brian and Shannon Gore, were arrested and charged with felony child abuse. The mother was also charged with attempted capital murder.
However, the gruesome twosome now faces first-degree murder charges after the remains of what authorities believe to be another child were found buried outside their mobile home.
"I've done this for 20 years, and I've never seen anything like this in my life," Gloucester Sheriff's Maj. Darrell Warren said.
A month-old baby boy was also found in the home, but was in good condition. Both he and the older girl are now in the care of the county Department of Social Services.
The horrific find came as police investigated a robbery on April 17.


A child's remains were found buried outside the Gores' home. (WTKR)

A nearby homeowner reported his house was broken into and claimed gold bullion, a vacuum cleaner, a passport, $2,000 in cash and other items had been stolen, according to a police report.
Investigators trailed the bullion to an auction house, which claimed to have bought the gold from 25-year-old Shannon Gore.
Authorities arrived at her mobile home in Gloucester with a search warrant when they made the shocking discovery.
The girl's blond-hair was matted and filled with knots. She wore only a diaper and t-shirt and was eating flakes of dried skin on her body.
Brian Gore, 29, reportedly told police the girl had been kept in the cage since the summer.
"It was horrific. I don't know what else to say," Lt. Scott Little of the Sheriff's Department told Virginia's Daily Press on Friday.
"They seemed like nice people," neighbor Tim Hudnall told the newspaper. He noted he had seen the baby boy, but never saw a girl with the Gores in the six years they've been neighbors.
"He was really a nice guy," Brian Gore's ex-girlfriend, Sandy, told WTKR 3 News in Norfolk. "He went to church and everything."
Deputies discovered the child's remains while digging under and around a shed at the mobile home Friday evening. The age, gender and identity of the remains are not known, pending an examination by the state Medical Examiner's Office.
The Gores are being held in prison as authorities determine how the child died. An autopsy report by the state medical examiner is pending.

Source: New York Daily News - Wednesday, May 4, 2011

The Food - Cashew, Will Think Again

The cashew nut, a popular snack, with its rich flavor means that it can be eaten on its own.
It is closely related to the Mango and pistachio plants.

Cashew trees are found growing in bushes near the equator.
It has five times more vitamin C than oranges, and contains high amount of mineral salts.
Delicious apart, cashew fruit is a great source of vitamins, minerals, and other essential nutrients.

India grew its own cashew, and now make up half the world crop at about 50 million pounds or 1 million cases.
India is the largest exporter in the world.
India cashews are known to be a bit smaller, a bit less white, and a bit more crunchy.

But by chance reading of the article here, My inner soul will give a second thought before buying cashew again.

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'Toxic District’ Destroying Expats’ Families
Pesticide Use Said To Leave Children Deformed; UAE-Based Organisations Join Battle To Ban Endosulphan
By VM Sathish

The Kasargodu district of the South Indian state Kerala has a close connection with the Middle East in general, and the UAE in particular.

Thousands of people from the district are working here in the emirates.

While these expatriates’ families often rely on the Gulf connection to better their lives, they are facing a much bigger battle at home - one that involves life, death and a toxic pesticide, Endosulfan.

Kasargodu district is a major cashew plantation area and Endosulphan was used as a pesticide for many years - sprayed from helicopters over the plantations.

Residents of the district and major human rights organisations – including the National Human Rights Commission of India - have since reported deadly toxic side effects on residents of the district.

Victims claim exposure to the pesticide has caused them to suffer cancer, physical deformations and abnormalities, epilepsy, multiple congenital skeletal deformations and other chronic diseases.

Reports have also come in about the death of flora and fauna, including frogs, birds, chickens and cows.

The seriousness of the issue was driven home here in the UAE when the eight-year old daughter of a UAE-based expatriate suffered an abnormal growth of her head while she was residing in Kasargodu.

Speaking to this website, the father, who requested his name withheld, said, “About 4,000 victims are slowly dying there. The victims have stunted growth and deformed limbs. Children are the worst affected.”

The drive against the use of Endosulphan has been on-going for some time now in India, but with such a large representation from the district here in the UAE, expatriates have decided to get involved to ensure the pesticide is banned.

Endosulphan's future will be voted on at the sixth meeting of the Persistent Organic Pollutants' Review Committee (POPRC) of the Stockholm Convention that is on in Geneva, Switzerland, this week.

More than 2,500 children from Malarvadi Bala Sangham (Childrens’ Club) Dubai, participated in a protest movement against Endosulphan by painting pictures and casting their symbolic votes in support of people back home born with deformities and other health problems.

The pesticide has been banned in over 80 countries and expatriate associations here are canvassing votes from community members for online petitions, asking for a total ban on the pesticide in India.

The National Human Rights Commission of India has also advised that the deadly pesticide should be banned.

Dubai Art Lovers Association (Dala), a leading socio-political orgaisation of the Indian community in Dubai, MAS Sharjah, Ras Al Khimah Expatriates Association, and a number of smaller organisations representing the Indian community are all campaigning that the Indian government take a stand against Endosulphan .

Social networking sites are being flooded with anti-Endosulphan campaigns.

K M Abbas, President, Endosulfan Victims Support Group, UAE Chapter told Emirates 24|7: “We have joined the campaign with other Indian organisations demanding that the Indian Government ban Endosulphan use and vote against the product at the Geneva Convention on April 25, 2011. Expatriate families are reluctant to acknowledge that they suffer health problems from Endosulphan because they will not get proper marriage proposals for their sons and daughters. It is a grave situation.”

Kerala Chief Minister, V S Achuthanantha, will participate in the protest against Endosulphan by fasting on April 25, 2011, the day when decision makers would be discussing and voting in Geneva.

Source: Emirates 247 - Sunday, April 24, 2011

Profit From The Poor

Fifty-four suicides in Andra Pradesh  have blown the lid off the social posturing by microfinance companies. Before the news of the deaths sank in, the country feted Vikram Akula, head of SKS Micro-finance, as the new messiah of microcredit. A 273 per cent growth in loan disbursement and returns to investors made him a national hero. India’s micro-finance institutions claim they followed the fabled Grameen Bank model of Bangla­desh. In reality, they went against its principles. And the government did not do enough; regulations are fleeting and they don’t touch where it hurts most: the high interest rates.
Richard Mahapatra reports from Andhra Pradesh. Arnab Pratim Dutta charts the growth trajectory of India’s microfinance institutions

An SHG in Warangal’s Jawahar Colony meets to discuss joint liability in October (Photo: Sayantan Bera)Ega Mounika was born into debt, lived in debt and died with debts. The college-going 20-year-old of Warangal’s Karimabad village immolated herself on September 25; three days later, she died. “My daughter wanted to release us from debt,” said her father Laxmi Narayan who sustained burn injuries trying to rescue her. He owns a paan shop and always had debts, which is why no bank found him worthy of a loan. So five years ago, when a microfinance institution (MFI) approached her mother, a beedi roller, offering a loan of Rs 10,000, Mounika was quick to say yes. She bought a sewing machine with the money, started a tailoring business, dividing her time between studies and the new machine. “Things were fine for two weeks,” said Narayan, “then we began to default.” Loan repayment is usually weekly in microfinance.
That was how the family entered a labyrinth of debts; nobody knew the way out. They borrowed afresh to pay off old debts and sank deeper. The only way they could avoid default was by taking yet another loan. “We took four loans worth Rs 80,000 from four different companies,” Narayan said. But that was hardly a solution. The family earned Rs 4,500 a month and had to repay loan installments of Rs 10,000 a month. With five loans on their head, Mounika’s family had a loan installment to repay almost every day. Then there were the three emergency loans of Rs 5,000 from moneylenders at 120 per cent interest in the past three years. Every day for five years, MFI collection agents would come to their house and get rough. “There was no peace any more, the family was ruined,” Narayan said.
On September 25, the collection agents told Mounika’s mother, sell your daughter to the flesh trade and repay. Mounika chose to die. Even before the family could come out of shock, the agents were back at their door. When Narayan asked for time, they refused saying the business model of microfinance companies does not allow that. Had the borrower committed suicide, in this case Mounika’s mother, the lending company could have claimed the sum from the insurance company as all loans are insured. No wonder, people have alleged MFI agents abet suicide (see ‘How the noose tightens’,).

If I am not creditworthy why did four MFIs give me loan? I need both credit as well as support to help me set up business that will be viable MANJULA GIRABENI, MFI customer, Warangal, Andhra Pradesh

Some 20 km away, Mohammad Saif of Jawahar Colony feels lucky. His mother attempted suicide on October 20 but survived. She got loans worth Rs 2 lakh from four companies. But even after paying for over 400 weeks, the outstanding amount is around Rs 1.5 lakh. Saif said he sold his autorickshaw; the small hotel they ran is shut down.
In 2006, his mother along with 13 other women in the neighbourhood, had formed a self-help group (SHG). Under the state government’s Indira Kranthi Patham programme—linking SHGs to banks for loans based on group savings—they saved money every month for a year to get a bank loan. Only three women got a loan from the SHG as regulations stipulate revolving loans. A year of saving and ensuring that everybody complies took time.
“I withdrew. Then a microfinance company came to my doorstep and gave me Rs 14,000,” said Sarojini Rathipilli, a resident. She set up a sari shop but with a sale of one sari in three or four days, she had to take another loan to repay the first one. In four years she accumulated four loans and weekly repayment that was 10 times her earning.
“Repayment takes away everything, even the business set up with MFI loans,” said Matapalli Radhika, a borrower. No business started with loans from MFIs has survived in Jawahar Colony, where almost every family has taken a loan. Now as they try to revive the SHG, the past default doesn’t qualify them to access loan from a bank. The alternative: moneylenders.
Village after village in Warangal only confirms that the rural credit business has undergone a suicidal makeover. There is great need for credit that is in short supply from benign sources like public sector banks. It becomes clear that every borrower from a microfinance company has suffered acutely because of the failures of other public credit programmes.
Advantage MFIs
Bhagyalaxmi Mahila Multi-aided Cooperative Society in Enugallu village in Warangal’s Parbutagiri block has a public credit programme that has not failed its borrowers. It has several SHGs as members and gets loans from nationalised banks showing group savings. The repayment rate has been encouraging at 80 per cent. The cooperative society, unlike microfinance companies, distributes profits among members; this year it gave a dividend totalling Rs 3 lakh and set aside Rs 5 lakh as revolving fund to attract more bank loans. “The 15 per cent interest is heaven compared to 36 per cent of the MFIs,” said Turi Laxmi, president of the cooperative.
But things are changing. Banks have suddenly stopped loans to the cooperative; they lend directly to SHGs. Bhagyalaxmi is an innovation. It has been recommended by many high-level government panels on rural credit. “The average loan amount with an SHG is not adequate. But banks refuse to recognise us,” said T Yugandhar of Sanghatitha Mahila MACS Federation, Andhra Pradesh, the apex body of such cooperative societies with over 2,174 SHGs as members. The cooperative got its last bank loan in April 2008. “Without immediate loans we will not be able lend to the rural poor. This obviously leaves space for MFIs to capture,” he said.
Rural India’s subprime crisis
Warangal’s story repeats itself in And­hra’s 22 other districts; it is constricted by a rural credit crisis. Around 75 per cent of India’s MFIs are located here.
The current crisis in Andhra Pradesh is the rural Indian version of the subprime crisis in the US in 2006. It started at the same time and with a similar unsustainable model of credit that involved high risk and high profit. In subprime lending, organisations give loans to people with poor credit worthiness. In the US, subprime lured many to multiple loans. But these loans had mortgages like the house or the car borrowers bought with the loan. MFIs adopted the same model but without a collateral. In the US lending companies took the hit while in Andhra Pradesh borrowers were crushed.
The news of recent suicide deaths provoked workers of a political party to vandalise the office of an MFI in WarangalAccording to information submitted by MFIs on October 29 to the state government, 50 per cent of rural poor households in the state have taken multiple loans. The interest rate ranges from 21.2 per cent to 60.5 per cent.
Down To Earth accessed these MFI submissions and found more than 80 per cent borrowers are from non-farm sectors. The majority of the rural poor sought loans to sell vegetables, run a dairy or do scrap and steel business. MFIs lend close to Rs 200 crore every week to non-farmers. According to a confidential report prepared by the Society for Elimination of Rural Poverty (SERP), state government body linking SHGs with banks for credits, of the 54 suicides in the state recently, allegedly due to harassment by MFI agents, 45 were by landless. “Most MFI borrowers are landless. And unlike the last spate of farmer suicides five years ago, mostly non-farmer and first time borrowers died in the current wave,” said Narasimha Reddy, journalist with Eenadu.
SHGs slow but steady
A survey found that only three per cent of rural borrowers were confident of getting a bank loan. Thus the SHG-bank linkage is a bonanza. Women first save—usually Rs 30-40 a month per member in a group of 14—for close to a year. The banks treat the savings as the collateral and lend an equal amount or more at 14-15 per cent interest. The SHG re-lends at around 16-24 per cent interest after assessing the borrower’s ability to pay back. Since 2006, under the Pavalla Wadi scheme SHG members pay an interest of three per cent while the state government bears the rest.

On one hand you are for profit so that you can attract capital from the market. On the other, you are under pressure from investors to grow fast. It is now all about making profit VIPIN SHARMA,CEO, Access

The state has the country’s largest number of micro-credit groups—975,362 SHGs with 11 million members. The number of SHGs has increased 10 times in the past decade covering almost 90 per cent of the state’s rural women.
An impact assessment by the Centre for Economic and Social Studies in Hyderabad, published in May this year, shows that while the micro-credit did help many, the sum was grossly inadequate. It found SHG members sourced 71 per cent of their credit demand from informal sources (read, moneylenders and relatives with interest rates ranging from 60 to 120 per cent).
Around 100,000 SHGs are yet to be linked to banks and thus to credit. “This probably explains why nationalised banks are lending less to SHGs and doing bulk lending to MFIs. This has been the trend since 2005,” said Kurapati Venkatanarayana, professor of economics with Kakatiya University, Warangal.
Another problem is the 12 per cent subsidy on interest. People pay the 15 per cent interest to the bank; after it certifies the SHG has repaid all loans, the government directly reimburses the 12 per cent in the SHG account. But there is a catch. “Banks delay the certification and it takes one to two years for the subsidy money to come through,” said Rama Jyothi, an independent observer.
Time is another factor. It takes an SHG three to four months to get a bank loan and another month to disburse. “Many banks don’t allow SHGs to lend their savings. This brings down the credit available,” admitted B Rajsekhar, chief executive officer of SERP.

The poor can handle credit, but it must be provided at a moderate interest rate. The current microfinance institutions tilt towards extreme profitability VIJAY MAHAJAN, president, Microfinance Institutions Network

Given this widening gap in supply people turn to MFIs for credit. “These companies tapped into an organised captive market,” said Vijay Mahajan, president of the Microfinance Institutions Network (MFIN), a self-regulatory body of for-profit MFIs. An MFI loan is with the borrower in three days. With no collaterals there are two ways to ensure repayment: form a joint liability group (JLG); if one member defaults the group is responsible. The other is coercion. An MFI collection agent gets around 55 per cent of his salary as incentive if collection meets the target.
Close to 80 per cent of SHG members have taken MFI loans. Andhra Pradesh is a pointer to the future. As MFIs scale up in the rest of India they will most likely deliver similar distress on a wider scale.

Read more:  Rise And Rise Of MFIs

Source:  Down To Earth