Two thirds of the villagers directly live on non-cash-crop agriculture and another twenty per cent are small time artisans. What I am asking is does the MFIs are a better alternate to moneylenders!
The government tried to introduce the MFIs to replace the loan sharks which are known as private moneylenders. But even after the introduction, why the government was being forced to bring an ordinance in AP and the MFIs suffered criticism. A poor who needs money wont look the formalities he has to fulfill and the number of processes he has to undergo. He needs money. So what happens, instead of going to a long procedure, he go to the moneylenders coz of the immediate availability of cash even on an interest rate which may go upto even fifty per cent. So the procedural process has to be looked into. It should be minimised so that the cash should be readily available to the poor.
Secondly, the interest rates are still too high for the poor who depends upon the non-cash-crop agriculture. Even for others it is too high. So instead of employing costly end user interfaces or back offices, the objective of the MFIs should be in lending the money with minimum interest rates in a cost effective enviroment. It should also avoid paying exorbitant salaries.
The suicides of farmers in AP due to harassment of the collection agents forced the government to bring an ordinance. So MFIs should make some policies which prohibits such activities.
Let the farmers only participate in the activities of the MFIs. Make the borrowers contribute something in the development of the Institution. It may be anything according to their skills.
Draft the policies, terms and conditions that an uneducated lay man can undertsand it in a more transparent manner.
The MFIs should share information and data with each other to avoid multiple debts of farmers.
These farmers are the roots of this country. These people have to dig a well before they are thirsty. So we should understand their limitations and help them.