Jharkhand: Flight of the Debt-Ridden Women

Many take loans in other people's names, and flee when they are unable to repay, leaving MFIs stuck with bad debt

- Ritwika Mitra

In Dhora Kola village in Jharkhand's Koderma district, life is inching back to normal for an 18-year-old teenager, her siblings, and father. Sometimes neighbours come in and ask about her mother's whereabouts.

Eight years ago, the teenager's mother fled the village after taking loans worth over ₹16 lakh from microfinance institutions (MFIs) and traditional money lenders in the name of another woman in the village.

This is a common practice in the village. For instance, if person A is in desperate need of funds, she convinces B, a neighbour or friend, to borrow money. A does this because she is already juggling multiple debts and is unable to repay them. The loan comes to B once her documents are verified and she gives the money to A, who pays the monthly installments. If A fails to repay, then B, in whose name the loan was given, is held accountable by the MFI or moneylender.

The teenager's mother, a habitual borrower, said she had no option but to flee the village once neighbours realized the scale of the loans taken by her, and demanded repayment.

When Mint spoke to the teenager's mother over the phone, she said she kept juggling loans at high interest rates to meet different expenses. "My husband had kidney disease, then I married off my daughters, supported them when they had kids, and then there was the children's education...and the daily expenses," she said.

Before long, the borrowing had reached close to ₹16 lakh. Now, she makes a living selling saris door-to-door somewhere in Koderma. "If I have to visit home, it is in the middle of the night so that nobody gets to know...my daughters come and live with me sometimes," she added.

Every person cited above spoke to Mint on condition of anonymity.

If people default, their credit scores typically drop and it would be difficult for them to get more loans from MFIs. This forces them to resort to informal and more expensive forms of borrowing.