II. Deteriorating Financial Situation of the People
September 19, 2025 https://rupeindia.wordpress.com/2025/09/19/ii-deteriorating-financial-situation-of-the-people/ the RBI does bear direct responsibility for the rapid growth of predatory microfinance from 2022. To understand why we term microfinance ‘predatory’, we need only recall the microfinance crisis of 2009-10, which resulted in mass distress, a number of suicides, and a protest movement in Andhra Pradesh. In its wake, the RBI was forced to place a number of restrictions on microfinance institutions (MFIs) to prevent the abuses which had led to the crisis.
The more socially oppressed sections are more dependent on informal sector loans, and this dependence has been increasing. The share of debt of Dalit households from commercial banks fell sharply during the period of post-1991 ‘liberalisation’; “The vacuum thus created was filled in by professional moneylenders. While professional moneylenders did emerge in 2002 as an important source of credit for other rural households as well, their hold over Dalit households was much stronger. The expansion of informal debt meant an increased and onerous interest burden on rural Dalit households