Women Demand Right to Credit at Public Hearing in Delhi

The All-India Democratic Women’s Association (AIDWA) organised a Public Hearing on “Micro Finance Loot” in Delhi on 24–25 August 2025, where Right to Credit from Public Sector Banks emerged as a core demand.

The two-day hearing featured testimonies from 16 women victims of microfinance institutions (MFIs), exposing systemic exploitation through exorbitant interest rates, coercion, and debt traps.

Background

• The Indian Constitution guarantees social, economic and political justice to all citizens.

• Article 21 ensures the Right to Life, which includes the right to live with dignity.

• Directive Principles of State Policy (Part IV) direct the State to promote the educational and economic interests of weaker sections.

• The RBI Act and the Banking Regulation Act mandate the Reserve Bank of India to regulate credit creation in the economy to ensure growth with stability.

• Yet, as the AIDWA report highlighted, the State has failed in providing economic justice, and the RBI has failed in regulating exploitative credit systems.

Findings of the Jury

The jury – comprising Justice Madan B. Lokur (Retd, Supreme Court), Prof. Prabhat Patnaik (JNU), Pamela Philipose (Journalist), Kirti Singh (Advocate), and Thomas Franco (Former GS, AIBOC) – concluded:

• Microcredit, once designed as a tool for empowerment, is now dominated by NBFCs and MFIs who borrow cheaply (below 10%) from banks under Priority Sector Lending, but lend to poor women at 26% or higher – replicating the role of old village moneylenders.

• Public Sector Banks have failed to expand branches and staff in rural and semi-urban areas, leaving space for exploitative institutions.

• Women are forced into multiple loans and endless debt cycles, facing harassment and coercion by recovery agents.

• The RBI has absolved itself of responsibility by allowing self-regulation, even restraining state governments from acting against NBFC/MFI harassment.

Key Recommendations

To address the crisis, the Jury recommended urgent reforms:

Right to Credit for Women

• Women-headed/single-women households to get priority sector loans at 4% interest from commercial banks.

• PSBs to provide loans up to ₹5 lakhs without collateral, covered by Credit Guarantee Schemes.

• All Jan Dhan account holders to be eligible for loans up to ₹1 lakh.

• Interest Rate Regulation

• Legal ceiling of 4% interest for microcredit.

• Ban on classifying bank lending to NBFCs/MFIs as “Priority Sector Lending”.

Banking Reforms

• Increase PSB branches and staff in rural areas.

• Fix direct lending targets to SHGs, farmers, MSMEs.

• Waive mandatory CIBIL checks for loans below ₹5 lakhs.

Protection of Women Borrowers

• Make harassment/coercion by MFIs a punishable offence.

• Provide free legal aid under NALSA and expand financial literacy training through women’s organisations.

• Transparency & Accountability

• Verify inflated statistics on MUDRA loans.

• Ensure RBI actively monitors loan/deposit interest rates.

• Stop RBI interference with state laws against usurious lending.

Conclusion

The Jury emphasized that credit is a fundamental requirement for a dignified life. As Thomas Franco observed:

“When banks can write off ₹16.5 lakh crore of loans to the rich, when a few borrowers get loans at less than 5% interest, and when banks run on people’s deposits – Right to Credit for the poor, especially women, is a justifiable demand. Providing only 5 kg of rice or wheat cannot ensure dignity. Access to affordable credit is essential for justice.”

Opinion expressed in this column is that of Thomas Franco, Former General Secretary, AIBOC / Steering Committee member, Global Labour University/ Joint Convenor of Peoples commission on Public Sector and Public Services.