dolma is form poor family and she had no land to cultivate. she took loan from landlord who charges high intrest rate. that year her crip failed and unable to pay her loan .. what would you pay back the loan?
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In the first part of the series Loans for poor in Bengaluru, we explored how the system of loan from informal sources with high interest rates is pushing the poor deeper into poverty. The second part explored the system of bank loans for poor, to see whether it benefits the poor who don’t have securities. In the third part, we examine how micro-finance institutions function, and what do poor people feel about it.
Mariyal, a 33-year-old domestic worker living in Ejipura slum in Bengaluru, has taken a Micro Finance Institution (MFI) loan for the first time. She has borrowed Rs 15,000 from the MFI Janalakshmi, by being part of a Joint Liability Group (JLG).
The idea behind JLG is that its members—five or more—are security for each other, since the poor have no assets to give as security otherwise. Mariyal’s interest rate is much higher than that of a bank loan, but much lesser than interest levied by ruthless local money lenders whom she usually depends on. But, she does not want to take an MFI loan again—she finds the MFI coercive and her group members unsupportive.