Two microfinance professionals in the Indian state of Andhra Pradesh reportedly have committed suicide after their microfinance institutions (MFIs) became insolvent. Mr A Pratap Reddy, the chief executive officer (CEO) of Sewa Mutually Aided Cooperative Thrift Societies (MACTS) Federation, is said to have killed himself because the MFI was not able to repay bank loans of INR 250 million (USD 4.5 million). Sewa operates in approximately eight districts of Andhra Pradesh and reported total assets of INR 237 million (USD 4 million) as of March 2011. The CEO of a different unidentified MFI in Andhra Pradesh also reportedly committed suicide several months ago for a similar reason.
After the government of Andhra Pradesh implemented a set of restrictions on the microfinance sector in 2010, the loan recovery rate for companies in the sector fell from 90 percent to ten percent, leaving many companies with debts they are unable to repay.
By Charlotte Newman, Research Associate
Sources and Additional Resources:
Rediff: “Debt Trap Turns Tragic for Andhra MFI Chiefs,” http://www.rediff.com/business/slide-show/slide-show-1-debt-trap-turns-tragic-for-andhra-mfi-chiefs/20120605.htm
MicroCapital.org story, April 16, 2012, “MICROCAPITAL BRIEF: Microfinance Institutions Network (MFIN) Asks Reserve Bank of India (RBI) to Assist in Recovering Loans Outstanding in Andhra Pradesh,” https://www.microcapital.org/microcapital-brief-microfinance-institutions-network-mfin-asks-reserve-bank-of-india-rbi-to-assist-in-recovering-loans-outstanding-in-andhra-pradesh/
MicroCapital.org story, February 28, 2012, “MICROCAPITAL BRIEF: 76 Criminal Cases Pending Over Alleged Role of Microlenders in Borrower Suicides in India’s Andhra Pradesh,” https://www.microcapital.org/microcapital-brief-76-criminal-cases-pending-over-alleged-role-of-microlenders-in-borrower-suicides-in-indias-andhra-pradesh/
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