India state pushes criminal cases for microfinancers it believes is driving borrowers to suicide
MUMBAI // The government of India's Andhra Pradesh state said it would push prosecutors to move ahead with 76 criminal cases against employees of Indian lenders it believes were involved with driving indebted borrowers to suicide.
The comments came after an Associated Press story showed that despite denials, top officials from India's SKS Microfinance had information that implicated its employees in borrower suicides. SKS is the market leader in India's microfinance industry, which specialises in small loans intended to lift up the very poor.
"We would like to take up the matter with the prosecution department," said R Subrahmanyam, principal secretary for rural development in Andhra Pradesh. "Usually this is not something which we would do."
"As far as the prosecution is concerned, they have to produce sufficient evidence and file the charge sheets," Mr Subrahmanyam said. "Once it goes to the court let's see how it goes. The minimum the state should be doing is compelling the prosecution to act quickly."
The government of the southern Indian state, which is India's largest microfinance market, blamed a spate of suicides in late 2010 on aggressive lending and collection tactics by microfinance companies. The companies have denied responsibility for the deaths.
SKS officials say they stand by their September 2011 affidavit to the Supreme Court of India, in which chief executive M R Rao swore that SKS "is neither the cause of nor responsible for any suicides in the state of Andhra Pradesh." The company denies that its board of directors authorised any investigations that implicated its employees in some of the suicides.
SKS said its employees have been acquitted by courts in two cases and only one case remains ongoing. SKS said that in another 12 cases police determined they were not involved or absolved employees of responsibility during their investigations. Those 12 cases are on the governments list of 76.
Many cases have languished during police investigation in India's notoriously slow criminal justice system.
In one case, investigators hired by SKS found that the family of a woman who killed herself after an SKS employee told her to prostitute her daughters to pay off her debt had been pressured to drop their case.
"Even today the victims are under pressure for withdrawal of the case," the report by Guardian's Human & Civil Rights Forum, which was commissioned in January 2011, said.
Some cases have been resolved out of court, said Davuluri Venkateswarlu, the director of Glocal Research in Hyderabad, which was commissioned by an industry group, the Microfinance Institutions Network, to examine the role of microfinance companies in 44 deaths.
Mr Venkateswarlu said that in 16 of the 44 cases he investigated there was evidence of a clear link between the actions of microfinance employees from several companies and the borrower's death.
Three of the cases highlighted in the Guardian's and Glocal investigations are not included on the government's list of the 76 cases it is pursuing.
Published: February 28, 2012 04:00 AM