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Microfinance Employees Told Borrowers to Kill Themselves to Forgive Loans

Microfinance Employees Told Borrowers to Kill Themselves to Forgive Loans

One of the largest micro-lenders in India, SKS Microfinance, is being investigated as a result of the deaths of 7 of its borrowers in Andhra Pradesh.  The company has denied any involvement but its own external investigator has linked SKS employees to the deaths.

For many years, Grameen Bank was the micro-finance success case study. Grameen Bank started among poor women in India and was such a resounding success that there is a Grameen USA that has since been brought to Queens, NY. Women repaid their loans timely and thereby established a means to take care of their families while establishing credit worthiness for further loans.  But the stories of  SKS micro-lenders taking a hard position with borrowers experiencing difficulty in repaying their loans is not for the faint of heart.

The company’s own investigators report that a “SKS debt collector told a delinquent borrower to drown herself in a pond if she wanted her loan waived. The next day, she did. She left behind four children.”

Another story relates that:

[an] agent blocked a woman from bringing her young son, weak with diarrhea, to the hospital, demanding payment first. Other borrowers, who could not get any new loans until she paid, told her that if she wanted to die, they would bring her pesticide. An SKS staff member was there when she drank the poison. She survived.

Video also reportedly exists in which the daughter of another borrower talked to one investigator.

Rajyam was unable to pay off $2,400 owed to eight different companies. Employees of microfinance companies, including SKS, urged other borrowers to seize the family’s chairs, utensils and wardrobe and pawn them to make loan payments, her family told investigators. Unable to bear the insults and pressure of the crowd of borrowers who sat outside her home for hours to shame her, Rajyam drank pesticide on Sept. 16, 2010, and died, the family says.

These deaths join a high numbers of suicides by farmers in this state trapped in a cycle of debt and desperation.  One expert who analyzed government statistics report 17,500 farmers per year killed themselves between 2002-2006.  In Indian state Andhra Pradesh, 1,313 cases of  suicide were reported between 2005-2007 because of the harsh circumstances associated with making a living. But the story with micro-credit borrowers is especially disturbing because it started off with such good intentions.

In this respect, the background of SKS Microfinance is quite interesting.  The company began in 2005 and like Grameen was a non-profit microcredit organization that grew rapidly. By August of 2010, they’d gone public with a huge $350 million dollar offering and a lot of speculation among private investors, most of whom were not the borrowers.  Shortly thereafter, media reports began to circulate that over-extended borrowers were killing themselves.  It was so bad that the state of Andhra Pradesh passed a law to halt corporate abuses. Big firms like SKS fought back asking the courts to stop arresting their employees.

I can only imagine that the pressures of a public firm focused on the company’s bottom line and the need to answer to its investors rather than be strictly guided by a social mission could become fertile ground for abuse.

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Photo credit: Flickr-by kalyan3

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102 comments

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12:01PM PDT on Jun 9, 2012

Make those employees drink poison and take their chances!

6:23PM PDT on Mar 17, 2012

Such behavior should be expected whenever a non-profit becomes a for-profit venture.

9:35AM PST on Mar 8, 2012

All of those debts should be forgiven immediately. People MUST be given the means to take care of themselves without haveing to pay it back to banks and share holders who already have plenty.Will they become dependent on the money? Are you dependent on food, water, shelter and everything money buys? The shame belongs to the people who perpetuate this system of 'makeing loans' to people just so they can survive.No excuse for this.

9:33AM PST on Mar 7, 2012

WTF? That's pure insanity!! The employees responsible should be charged, and the company shut down!!!

8:31AM PST on Mar 7, 2012

A sick and painful story..... but what they do is not so different from what many of our own companies do when they go public.

8:29AM PST on Mar 7, 2012

a painful story...... but no different than what so many of our own companies who go public become and do

2:50PM PST on Mar 6, 2012

This is just so senseless.

2:07PM PST on Mar 6, 2012

What a disgusting situation! When charitable intentions get corrupted, they do far more harm than other corrupt companies, because they are dealing with the most vulnerable levels of communities. Laws need to be in place to close down such vicious practices. It sounds like the dark ages in Europe.

10:56AM PST on Mar 6, 2012

The people need to stand up, organize, march down to these filthy microfinance offices...and then they can choose to a. stone every employee as they come out the building, b. burn the establishment to the ground, or c. storm the building and beat everyone inside. If the banks are going to act like beasts, then they shouldn't be surprised when their victims return the favor three-fold.

8:38AM PST on Mar 6, 2012

Micro loans totaling $2,400 to 8 companies? It sounds like the companies are just the the banks here. Making loans they shouldn't then screaming at people to borrow more, kill themselves, sell anything, I'll bet including their bodies and/or their children, to pay pay pay. Yep, just like here.

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