Wasn't It 'Abdullah Al-Mubarak During The Haj?

Turkish descendent 'Abdullah bin Al-Mubarak, born 118 years after hijrah, was entering Kufa in Iraq.

On his way to Makkatul Mukarramah to perform his haj, he saw an old woman sitting on a rubbish-heap plucking a duck.
It occurred to him that it was indeed a carrion, dead and rotting, not fit for her consumption.
He stopped his mule, and asked the woman if the duck is slaughtered or already dead.

When she answered the latter,
he asked, 'then why are you plucking it?'
'So that my family and I can eat it,' was her reply.

'Abdullah Al-Mubarak told her that ALLAH Subhaanahu Wa Ta'aala forbid carrion consumption in a country of abundance.
The woman kept chasing and shooing him away, for being a busybody .

After a long exchange of words, he asked the whereabout of her house.
He then left the spot, and rented a proper lodging for him to stay.

At the rented lodging, he then approached a man.
He offered the man some monetary reward if the man accompanied him to the address given by the woman that he had earlier met.

Once reaching the place, 'Abdullah Al-Mubarak requested the man to knock at the door with a stick that he had.
The woman asked who was at the door.
When 'Abdullah asked her to open the door, she partially opened it.
He insisted that she opened it wide, all the way.

He got off his mule and hit it with the stick that he had.
The mule went into the house.
Then he said to the woman that the mule with all the provision on it, money and clothes are all hers.
For this world and the Next.

'Abdullah Al-Mubarak stayed behind.
He did not proceed to Makkatul Mukarramah, until the haj season ended.
He returned home when all pilgrims had returned after performing their haj.

****** 

Some of his country folks went to greet him.
They congratulated him for accomplishing his haj.

He told them that he was down with illness and did not go on haj.
But one of them said,
"Subhaanallaah!
Did I not leave my goods with you, while we were at Mina on our way to 'Arafah?"

Another person said the same thing.
He turned to them saying, he did not know what they were saying.
Once again, for himself, he did not go on haj that year.

*** 'Abdullah Al-Mubarak dreamt that someone was telling him,
''Abdullah, rejoice! for ALLAH has accepted your sodaqah.
HE sent an Angel in your form, performing the haj for you.'"

The Catalyst, Mohamed Bouazizi

A Fruitseller Ignites A Revolution

The Star visits the family and village of Mohamed Bouazizi, a poor fruit seller who set himself on fire to protest against official harassment. The incident triggered a revolution in Tunisia and also sparked off protests against autocratic governments in several Arab countries.
IT was early Friday, just before 8am. After picking olives from a farm, Manuobya looked in on her 26-year-old son Mohamed Bouazizi, who was still asleep and something stirred inside her.
“I felt a kind of love and affection that I never felt before. I said to myself: ‘Mohamed, you are so tired. May God give you a car and another job,’” she tells Sunday Star during an interview at her home in a village near Sidi Bouzid.
Just the night before, Manuobya recounts, Mohamed Bouazizi, who sold fruits from a push cart, was talking about working harder to earn enough to buy a pick-up truck which would make it easier for him to transport his produce. And that night, he gave his mother quite a lot of cash.
“He told me: ‘You know, mother, I’ve never got so much money as I have this week.’

Painful reminder: Manuobya caressing a giant poster of her late son Mohamed Bouazizi who has become a hero in his country and the Arab world.

“He told his sister Leila: ‘If you succeed in school, I will pay for your education.’
“He said to his brothers: ‘If you do well, I will buy you what you want,’” Manuobya relates, looking both sad and proud at the same time as she talks about Mohamed Bouazizi.
Her son, she remembers, was in such good spirits that Thursday night.
And he was teasing, playing and laughing with his eight-year-old half-brother Ziyad a lot more than usual before they went to sleep.
Manuobya says she even ticked them off for making “so much noise” for fear it might disturb the neighbours.
Before he went to bed, Mohamed Bouazizi told his mother of his plans for the next few days.

Where it all started: A view of the Government building in Sidi Bouzid where Mohamed Bouazizi set himself alight on Dec 17.

He said he was getting nicer fruits and would work on Friday and Saturday, and rest on Sunday to go to Sfax (a town in Tunisia) to see his elder brother Salem.
But a few hours later, things changed forever for Mohamed Bouazizi, his family and Tunisia.
On that fateful Friday of Dec 17, after Mohamed Bouazizi had woken up, dressed and gone to his usual spot in the small of town of Sidi Bouzid to sell fruits from his cart, a municipal inspector, Faida Hamdi, and her three aides came after him.
Manuobya says Mohamed Bouazizi was the happy sort but the “police and the government always want money from him and won’t let him do his job”.
“They say he is selling fruits illegally. They want a rasuah (bribe) from him, so he is always fighting to do his job,” Manoubya elaborates.
When Mohamed Bouazizi refused to pay the bribe, Faida and her aides tried to seize the fruits. He then phoned his uncle, who is also his stepfather, for help.
But this angered the municipal officers even more.
“Faida told him that she would leave the other fruit sellers alone but not him and that she would come after him every day.
“She grabbed the fruits but when she wanted to remove the weighing scales, Mohamed Bouazizi wouldn’t let her because the scales were not his.
“That was when Faiza slapped him on the face, spat at him and said terrible things about his dead father,” relates Manuobya, who heard details of the incident from eye witnesses, including her son’s friends.
She believes the public humiliation – being slapped and spat on by a woman who also insulted his late father – was too much for her son to bear.
“He was so shocked and utterly humiliated. It was so shameful and, to him, a loss of dignity.”
When Mohamed Bouazizi, who wanted to seek justice, knocked on the municipal office door, the people there would not entertain him.
“Nobody would listen,” his grief-stricken mother says.
That was when Mohamed Bouazizi made his desperate and last cry for help.
He drenched himself with petrol and then lit himself up – right in front of the government building.
People rushed to douse the flames with their jackets, and someone even grabbed a fire hydrant but found it empty.
It was too late. Within seconds, Mohamed Bouazizi was charred but still alive. And that was how his stepfather Omar found him.
“I couldn’t recognise him because he was totally burnt. Then he uttered the Kalimah Shahadah (a Muslim declaration of faith).
“And I knew from the voice that it was Mohamed Bouazizi. Those were the last words he spoke,” says Omar, adding that both of them were supposed to have gone for Friday prayers that day.
Mohamed Bouazizi was rushed from one hospital to another because they could not treat the severe burns. He lived on for another 18 days and died on Jan 4.
By this time, news of what had happened to the poor fruit seller who just wanted to make a living spread through Tunisia like wildfire. His town, Sidi Bouzid, was the first to rise up.
Noha Farah left her children at home and went to the government building every day to protest and shout for change and for the president to quit.
She says she knew Mohamed Bouazizi personally.
“I always bought fruits from him. He was a very nice person. I cried when I saw what had happened,” she shares.
Through Facebook and Twitter, word spread and the protests grew all over Tunisia, shocking the world.
Here was Tunisia– an educated, moderate and stable country.
Yet its people, fed up with poverty, unemployment and a rotten corrupt system, spontaneously rose up to kick out their leader of 23 years, Zine El Abidine Ben Ali.
They wanted to reform their government which made it tough for people like Mohamed Bouazizi to make a living.
And soon, the Tunisian revolution caught on in other Arab countries.
Egypt managed to chuck out its strongman Hosni Mubarak who ruled the country with an iron fist for 30 years.
Libya is still in the process of trying to oust its leader of 41 years, Colonel Muammar Gaddafi.
The spark for change has also been lit in Bahrain, Yemen, Jordan, Iraq and even Saudi Arabia. And although Manuobya wishes every night that Mohamed Bouazizi’s death is just a bad dream because she misses him dreadfully, she believes what he did was for a greater good.
“It is unbelievable what has happened. I thank God that things are better for all of Tunisia. I’m happy that He has opened the door for a lot of Arab countries. Freedom is a good thing,” she adds.
Manuobya followed the events in Egypt closely until Mubarak fell and her focus now is on what is happening in neighbouring Libya.
She wants the “evil” Gaddafi who has killed too many of his people to be replaced.
“God help Libya,” she says.
A neighbour, Alfiyah, tells how women, including strangers, drop by to visit Manuobya from time to time and offer words of comfort because they know how painful it is to lose a child.
“The women say ‘thank you for your son and for changing Tunisia’. The situation in Tunisia is still not all that we have hoped for but it is still early days yet,” she adds.
Noha Farah, however, feels something is still missing.
“We are happy but our happiness will not be complete until the Libyan revolution ends and the people there are also free,” she says.
Overnight, Mohamed Bouazizi has become a hero in his town, country and the Arab world.
Muhammad Han Zuli, 31, who speaks flawless English and lives in Sidi Bouzid, has tremendous respect for the fruit seller who triggered off a revolution.
“He gave us the best things in the world – freedom and democracy.”

Source: The Star - Sunday, March 14, 2011

The Food - In All Midst Of Scarcity Of Source And Finance

The Washington-based poverty-fighting institution said its food price index increased by 15% between October 2010 and January 2011.
It is just 3% below its 2008 peak during the last food price crisis and it thus translates into a 29% rise in food prices over the course of a year.

World Bank data released two days ago showed higher food prices for wheat, maize, sugars and edible oils.
Maize prices soar about 73% over six months, while prices for sugar for fats and oils have risen 20 and 22% respectively, in the past quarter alone.
It cautioned that rice prices needed monitoring given measures by some countries to significantly import more rice to boost domestic stocks. 
The rise in food prices have pushed 44 million more people in developing countries into extreme poverty since June 2010.

Catastrophic storms and droughts have hurt the world's leading agriculture-producing countries, including flooding and a massive cyclone in Australia, major winter storms in the United States, and fires last year in Russia.

Beijing has earmarked 13 billion yuan to combat drought.
The dry spell in northern China's wheat heartland has caused considerable concern abroad and even sparked a UN warning last week about the impact on winter crops, a key harvest for the world's biggest producer of the grain.
Dry spell had affected at least 7.7 million hectares of wheat crops but snow fell over the weekend across much of northern China including major wheat-producing provinces Shandong and Henan had somehow eased some concern.

China has sought to alleviate fears that will affect international food prices.
It has announced measures including diverting water to affected areas and constructing emergency wells and irrigation facilities.
The country is said to have "abundant" reserves of grain that were sufficient to meet the nation's needs.
If China were to buy a large amount of wheat overseas due to a crop failure, prices on world commodity markets would surge at a time when food costs are already causing governments headaches.

Huge swings in prices are characteristic of the latest bout of food inflation.
Asian inflation is amongst the most sensitive in the world to food price shocks, despite the likely introduction of further food subsidies and other price controls.

World Bank chief, Robert Zoellick said global food prices have reached "dangerous levels".
He warned of the impact that could complicate fragile political and social conditions in the Middle East and Central Asia.
The recent food price rises are causing pain and suffering for poor people around the globe.
He warned that a sharp rise in food prices across Central Asia could also have social and political implications for that region.

Although higher food prices were not the main cause leading to recent protests in Egypt and Tunisia, it was an aggravating factor and could become worse.
A World Bank team was currently in Tunisia taking a closer look at the country's transition and assessing possible financing needs, including food assistance.

Egypt to him, may not need World Bank funds because its financing situation "is one that should be able to be managed" over the short term.
He was concerned that countries as Egypt, Tunisia and Jordan address causes of their social upheaval, higher food prices may add to "the fragility that is always there any time you have revolutions and transitions."

******

26-year-old Mohamed from Tunisia origin the series of demonstrations.

Since Mohamed could not find a job, he did an honest petty trade, sold fruits as a mobile hawker to feed his family of seven.

Despite that, he was often harassed, intimidated and bullied by the police.

Aspiring Mohamed had a dream, he had always wanted to buy a small van to expand his business, to avoid the police every few days.

However, his wish remained just a dream, an illusion, when on December last year, he was caught by a policewoman - Not only his fruits was confiscated, but his electronic weighing scales too.

To add salt to the already wounded wound, he was present with a slap on his face.

Not only was his business destroyed, he was humiliated too.

In indignant injustice, he protested by committing self-immolation in front of a government building.

The fire took the life of Mohamed, but ignited the flame of dissatisfaction with the government in North Africa. The Tunisian government eventually collapsed.

******

The Mohamed flare sparked the demonstration tide spread to Egypt.

Compared with the small country of Tunisia, Egypt has a population of 80 million, nearly half of the population is living on less than US$2 per day.

As many as 90% of the youths are under the age of 30. 

Around 60% of the entire population are unemployed, and many among them are highly educated but... jobless.

With no job and no income, yet the cost of living keeps escalating, they are living under great pressure, and staying afloat to survive is becoming more crucial.

But the government remained indifferent.

Resentment and bitterness accumulated.

This is one of the factor that aggravates their dissatisfaction with the 30-year reign of President Hosni Mubarak.

The sacrificial death of Tunisian hero Mohamed has inspired the Egyptians to rise, mobilise and organise to fight for changes in their country.

The current situation in Egypt has caused concern around the world.

When times are good, housing, food and clothing are not the cause of worry, maybe official corruption, government mismanagement, and the existence of authoritarian regimes, could at least be tolerated.

But once daily needs are at stake and there is insufficient food on the table, people will rise against their government. 

Many citizens in the Middle East countries have almost similar destiny with the Egyptians and Tunisians. They are now expressing solidarity. 

Perhaps, the Mohamed flame is not just spreading in North Africa and the Middle East, but may spread all around the world - There are just too many Mohameds worldwide.

Regardless of any race, language, religion or ideology, Mohameds or not, as long as there is insufficient or no food at all, on the table, the grumbling of the empty stomach is all the same, all over the world.

If the government does not respond or pay heed to the voice and needs of the people, they will be condemned and more often than not, ousted.

The World Bank chief said the international community needed to be aware of such risks and should not exacerbate problems by imposing policies, such as export bans or price fixing, that would push global food prices even higher.

Global security is now about food security issue as he said, "There is no silver bullet to resolving the potent combination of rising and volatile food prices."

******

Unlike the 2007-08 food crisis, higher prices have not yet affected all regions of the world.
Across Asia and in some parts of Latin America, Eastern Europe and Central Asia, costlier food is pushing up inflationary pressures.
"Central Asia is a region where these good prices have increased substantially and given the poverty level... there is a real stress point that could have social and political implications," The World Bank chief, Zoellick said.

Meanwhile, good harvests in Sub-Saharan Africa have so far spared that region from rising prices.
There was less margin for error in Africa because of high poverty rates across the region, although in Burundi and Cameroon where bean prices, an important food source, have risen by more than 40%.

The bank said that the price rise swelled the ranks living in extreme poverty, which it defines as under US$1.25 (S$1.60) a day per person, forcing poorer people to eat less and often less-nutritious food and increasing malnutrition.
The poor spend more than 80% of their total disposable income on basic foods.
If prices keep rising, poor families have lesser and less nutritional food to keep them healthy.

Rich donor countries needed to focus food aid on Afghanistan, Democratic Republic of Congo, Kyrgyzstan and Mongolia, which face acute food price spikes.
Countries with limited farming space and low international foreign exchange reserves in their budgets, yet import commodities in large quantities may need funding help.
These countries are urged to scale up social programs to protect the nations.
Jittery commodity markets should be made calm by all international community.

Whether or not there is food on the table is no more a mere personal problem, but an issue of dire consequences, affecting even the survival of a government.
The tidal wave after wave of demonstrations in the North African countries is a wake-up call, and its revolutionary echo is reverberating around the world.

******

However, as in Egypt and Tunisia, technology is playing its part.
Technology keeps Africans informed about what they are owed.
With more than 500 million mobile phones in Africa, compared with around 50 million a decade ago, African governments risk unrest of their own citizens.

The continent is facing as many as 17 elections this year against the backdrop of seismic political upheaval in the Middle East.
Voters might take to the streets or using the ballot box to demand what is supposed to be due to them.
Many African countries are due to have elections within the next two years.
The nation wants a decent share of what belongs to them - The continent's wealth.

The continent  is home to 90% of the world’s platinum reserves and a large chunk of world's gold.
It is said, Africa has about 30% of the world’s mineral resources yet it only produces about 10% of the world’s minerals.

How great is the wealth sitting beneath Africa’s soil?

Doesn't the wealth waiting for calls?

Will it continue to be preserved?

Benefiting no citizen who should deserve?

Will it be evenly shared by all?

Or just by a family despite the nation's fall?

Extreme Weather Pushes Food Prices Higher - February 2, 1011

Extreme Weather Events Helps Drive Food Prices To Record Highs - January 6, 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