Kolkata: On a humid August evening in Kolkata’s Garia Model Colony, 29-year-old homemaker Mayuri Naskar swallowed poison in a desperate attempt to escape the harassment of microfinance recovery agents. She survived – briefly.

Before she could return home from the hospital, or speak to the police, she disappeared.

Her family says Mayuri is now missing, swallowed by the same informal machinery that has consumed numerous women in the neighbourhood.

In the cramped bylanes of Garia’s Itepanja area, residents say several women have disappeared in recent months, pushed to the brink by debt, harassment and fear. Families rarely lodge police complaints because the root of the crisis – unpaid loans – carries stigma and a looming threat of retaliation.

Namita Mondal of Balia Sahapara shows The Wire a thin, handwritten list. This is the only document issued by lenders. She had borrowed Rs 20,000 to expand her small self-employment venture. After 26 weeks, interest inflated the amount to Rs 31,200.

“To pay one microfinance institute (MFI), I must borrow from another. To pay that, I borrow again. None of these companies have offices here, but their agents sit in every para,” Namita says.

Across neighbourhoods, residents describe a common pattern. In these streets, the sight of young men wearing helmets, mobile phones pressed to their ears, circling women’s homes many times a day has become almost routine. These men, locally known as bouncers, are the human instruments of a vast, under-regulated private credit market whose rise has pushed thousands of women into a devastating debt trap.

The process often begins innocuously. Residents allege that the microfinance agents do not provide passbooks, formal loan documents, or contracts. Instead, they hand out simple handwritten lists recording borrowings and instalments.

“I owed only Rs 4,800. The Netajinagar police called, saying if I didn’t pay in three days, they’d ‘pick me up’. Banks don’t give loans now. Only these private companies do,” Sarvani Bhuiya, another borrower, recounts harassment directly from the police. 

Residents say that in many parts of Kolkata’s suburbs and rural West Bengal, almost every household is affected in some way by microfinance loans.

“Banks no longer give loans to women’s self-employment schemes like they did 15–20 years ago. Now private MFIs and app-based lenders hand out loans instantly but at crushing interest rates,” Sarvani explains.

Also read: In Rural Bengal, Microfinance Loan Traps Are Created Out of Circumstance and Lack of Information

This situation stands in contrast to the Indian constitution’s Directive Principles of State Policy, which call upon the state to promote the educational and economic interests of weaker sections of society. Microcredit was originally introduced as one of the instruments intended to support this objective by providing accessible credit to marginalised families.

The sector today is dominated by Non-Banking Financial Companies (NBFCs) and Micro-Finance Institutions (MFIs), which obtain funds from public sector banks at interest rates below 10% under the Priority Sector Lending Scheme, and then lend to borrowers, many of them poor women, at significantly higher rates. 

“Earlier, SHGs (Self Help Groups) and cooperatives provided women with low-interest capital. Today, central policies and state apathy have pushed poor women into the jaws of predatory MFIs,” says economist Ishita Mukherjee.

In West Bengal, an estimated 24 lakh women are currently linked to microfinance loans. Many of the women interviewed by The Wire said they live in constant fear of humiliation, asset seizure, pressure tactics, and other forms of coercion related to loan recovery.

“To buy a sewing machine and earn from tailoring, I went from panchayat to BDO to banks for months. They refused. I had no choice but to take a microfinance loan. Within one month, bouncers came four times, threatening consequences if I failed to pay on time,” Salma Sultana of Lalbagh in Murshidabad district, said.

According to the March 2025 report of Sa-Dhan, the self-regulatory organisation of private microfinance companies, among the 25 districts in the country where private microfinance penetration is highest, 11 are in Bihar and the next six are in West Bengal. At the top of the list nationwide is Murshidabad, one of the state’s poorer districts with a significant minority population, where the total outstanding microfinance loan amount stands at Rs 4,239 crore.

Experts say that part of the regulatory challenge lies with the Reserve Bank of India (RBI), which has allowed the industry to operate largely through self-regulatory organisations (SROs) run by the MFIs themselves. This has reduced direct regulatory oversight over interest rates and recovery practices, and it has limited the ability of state governments to introduce legislation addressing such lending.

“Since 2022, RBI lifted caps on interest rates for MFIs. They use this freedom to trap poor women into multiple loans at exorbitant rates – even 60-70% annually. When women cannot pay, MFIs seize utensils, houses, assets, and even assault women. Some appoint bouncer,” claims Rana Mitra, general secretary of the Nabard employees association. 

According to researchers and activists, this regulatory framework has allowed microfinance companies to operate with substantial autonomy across the country, using digital recovery tools and extensive field networks in ways that resemble the role historically played by informal moneylenders, but on a much larger scale.

In some districts, local terminology reflects the pressure borrowers face.

“In villages, microfinance loans are now called ‘stree bondhok rin’ or the wife-mortgage loans. Women are pressured to keep lenders sexually or socially ‘happy’ to ease repayment burdens,” claims Rakhi Roy, a women rights activist from Hooghly. 

The crisis gained national attention at a national public hearing held in Delhi on August 23-24 this year based on a year-long survey of 9,000 women across 21 states. Over 500 women from 20 states recounted their experiences before a jury – that included former Supreme Court judge Madan B. Lokur, economist Prabhat Patnaik, journalist Pamela Philipose, former AIBOC general secretary Thomas Franco, and advocate Kirti Singh – describing suicides, sexual assault, domestic violence, asset seizures and severe repayment pressure from NBFC-MFIs and fintech lenders. Many said it was the first time they had spoken about their experiences.

In Purba Bardhaman’s Raina, women recently confronted and chased away recovery agents, while in nearby Paraj, residents say no new microfinance loans have been taken in the past year. These remain limited instances of resistance in a state where millions of people continue to depend on high-interest microfinance lending.

Translated from Bengali by Aparna Bhattacharya.

If you know someone – friend or family member – at risk of suicide, please reach out to them. The Suicide Prevention India Foundation maintains a list of telephone numbers they can call to speak in confidence. Icall, a counselling service run by TISS, has maintained a crowdsourced list of therapists across the country. You could also take them to the nearest hospital.

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