The micro-finance companies (MFIs) taking advantage of demonetization of high value currency are slowly re-entering the Sircilla textile town and lending small loans to powerloom weavers. Demonetization has cast its shadow on the powerloom industry which is already reeling under crisis due to no-takers for their grey fabric (produce) in Sircilla textile town.
Two micro-finance companies started providing loans ranging from Rs 2,000 to Rs 5,000 after collecting bonds and sureties. They collect a whopping interest rate of 36 percent and burden the weavers. People of Sircilla still remember the harassment by micro-financers who operated till 2008, said Samalla Mallesham, AITUC leader.
Usually, November and December months are lean season for the movement of fabric. Announcement of demonetisation has come as a rude shock to the main purchasers of fabric – traders, powerloom owners and powerloom workers. As the fabric production and sales are done only through cash, the ban and restrictions on withdrawal of cash from banks has become a cause of concern for all persons involved in the industry.
There were incidents of weavers resorting to suicide unable to bear the mental agony and torture by the agents of micro-finance companies.
She said that following the demonetization, the administration should take measures to eradicate the role of micro-finance companies at the earliest.
It may be recalled that the then Chief Minister of united Andhra Pradesh Y.S Rajashekhara Reddy removed micro-finance companies by making the nationalised banks provide loans to weavers under Total Financial Inclusion (TFI) programme.
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