Manoj Singh 
Gorakhpur: On December 14, 30-year-old Aarti, the wife of a migrant labourer trapped in a cycle of debt from micro-finance companies, took her life by consuming poison.
The agents of a micro-finance company which she had borrowed from had arrived at her and her relative’s houses. Humiliated, Aarti made a final phone call to her husband, noting that she was dying by suicide over her inability to pay the loans.
The incident took place at Mishrauli village of Sewrahi area in Uttar Pradesh’s Kushinagar district. The victim’s family members have filed a complaint with the police against the micro-finance company, accusing it of abetting the suicide.
In the wake of this incident, several cases of poor women in other villages like Mishrauli getting caught in a debt trap set by micro-finance companies have surfaced. In most cases, women mortgage their jewellery and land to repay the loan.
It has also come to light that the agents of such micro-finance companies resort to harassment tactics to recover the loan and violate the guidelines issued by the Reserve Bank of India, routinely.
In addition, there is a distressing pattern of the same person taking loans from several micro-finance companies at high interest rates. In the case of Aarti, five micro-finance companies had given loans to her for agricultural work and to purchase cattle. Aarti used the loan amount towards the construction of her house for which the fund received under the Pradhan Mantri Awas Yojana – less than Rs 1.20 lakh, did not suffice. To repay the debt of owed to one company, she borrowed from another company and then from a third company, thus getting trapped in the cycle.
Aarti’s husband Dharmanath Yadav works as a contract labourer in Najafgarh near Delhi. His job is to clean empty liquor bottles for which he gets paid Rs 15,000 to Rs 16,000 a month despite working four to five hours overtime each day. Most of these earnings had been going into the repayment of the loans. The family was in dire straits.
Aarti’s husband Dharmanath. Photo: Manoj Singh.
Aarti consumed poison at around noon. Dharmanath was at work at the factory at the time. Aarti had called him in the morning asking him to send money so that she could make the payment that day. Dharmnath had promised to send the money by afternoon but the agents of the micro-finance company reached Aarti’s house in the morning itself. Some other agents also reached Aarti’s maternal home in Beniya village to pressurise her further. Aarti eventually left her children at home and consumed poison at Brahmasthan in Sewrahi. Then, in a phone call to her husband, she told him that she was unable to repay the loans and requested him to take care of their children.
“I had asked her why she took the step even though I was arranging for the money. She did not believe that I would be able to arrange the amount. She also said she was unable to bear the humiliation,” Dharmanath said, adding that she then switched off her phone.
He called his mother-in-law Naina Devi. Thus alerted, Aarti’s parents found her and rushed her to the Banrha Community Health Centre and then to the District Hospital for treatment. She passed away that night itself.
Dharmanath only had Rs 100, so he borrowed Rs 500 from a fellow labourer and boarded the train home. By the time he reached Mishrauli the next day, his wife had already died.
Aarti and Dharmanath were married in 2014 and have three children. The eldest son is seven years old, while two younger daughters are four and two years old.
Dharmanath and his family had been displaced by river erosion in 2013. Earlier, he lived with his four brothers and parents in a tiny hut in a village named Nanhu Tola, located between the Narayani river and the embankment in Pipraghat. He also had agricultural land there. About 60 other families also lived in the village besides him.
In 2013, four hamlets including Nanhu Tola, Phal Tola, Local Tola and Govardhan Tola were completely destroyed due to erosion by the Narayani river and houses and agricultural land were submerged. The government said it would settle the people displaced due to river erosion but no help was extended by the administration eventually and the displaced people settled wherever they could. Dharmanath and his brothers came to Mishrauli. Dharmanath’s father Brahma Yadav bought about four kattas of a tract of severely uneven land. The family erected a hut and started living there.
Also read: Over 1 Lakh Houses Under PMAY-G Diverted to UP After 24 States and UTs Fail to Sanction Them
The youth of these families were forced to migrate to find work. Dharmanath and his three brothers also went to Delhi to work as labourers. Their earnings bought them their daily meals but the family was forced to continue living in the hut, they said.
All four of the brothers applied for housing under the Pradhan Mantri Awas Yojana one and a half years ago. When Dharmanath received Rs 1.20 lakh for the construction, he started building the house. Since the land was full of pits, he had to spend a lot of money on building a strong foundation. He said Rs 65,000 was spent only on soil to fill the pits while the remaining amount was used for the construction of walls. During this period, Aarti came in touch with a group of women linked to micro-finance companies. In the hope of completing the house, she initially borrowed Rs 30,000. However, this loan was granted to her in the name of agricultural work. When money fell short, she borrowed loans from five micro-finance companies one by one – Chaitanya India Fin Credit Private Limited, Bharat Financial Inclusion Limited, Suryodaya Small Finance Bank Limited, IIFL Samasta Finance Limited, and Utkarsh Small Finance Bank Limited.
Suryoday Small Finance Bank Limited issued Aarti a loan of Rs 28,000 on February 16, 2021 for buying a buffalo. This loan was given at 14% flat interest which was to be repaid in 24 instalments of Rs 1,500 each on May 3, 2023. Regarding this loan, documents recovered from Aarti’s house reveal information about payment of instalments till September 2022. Dharmanath could not provide information about whether other instalments were paid or whether Aarti was unable to pay them.
Another document shows that Aarti was given a loan of Rs 50,000 by Suryoday Small Finance Bank Limited on September 8, 2022 in the name of ‘Agri AH Cow’, which was to be repaid in 24 instalments of Rs 2,700. Aarti had deposited one of the instalments on December 6.
IIFL Samasta Finance Limited gave a loan of Rs 50,000 to Aarti for agricultural work at an effective interest rate of 28.25%, the instalment of which was Rs 1,220 – to be paid on December 14, the day Aarti died by suicide.
Similarly, Utkarsh Small Finance Bank Limited gave a loan of Rs 30,000 to her in the name of Agri Input at 26.88% annual interest on August 3, 2022, which was to be given in 52 instalments of Rs 730 each. Aarti had deposited one of its instalments on December 6 and she was supposed to deposit its 35th instalment on December 20.
Bharat Financial Inclusion Limited had given a loan of Rs 30,000 to Aarti on January 19, 2023, with Rs 500 weekly instalments. Aarti could not pay the December 7 instalment of the loan. As a result, she had to pay Rs 1,000 for this loan on December 14.
Aarti was also given a loan by Chaitanya India Fin Credit Private Limited. Dharmanath was not aware of the exact loan amount.
These micro-finance companies also charged processing fees and other upfront charges ranging from Rs 500 to Rs 1,400 while issuing the loans.
Aarti’s three sisters-in-law said they had also borrowed loans from such micro-finance companies. Meena also invested the loan amount in the construction of the house in anticipation of receiving funds under the Union government’s housing scheme. But she got neither housing nor any funds, and today she has accumulated a debt of nearly Rs 2 lakh for which she has to pay instalments of Rs 6,700 every month. Meena said that they are so entangled in debt that they are forced to survive on the bare minimum. “We had thought that we would at least be able to build the house but that too could not happen,” said Meena.
Meena. Photo: Manoj Singh.
“Where will we get the money to install the lintel? Right now our only worry is to get rid of the debt. We will never get into it again.”
Meena said that her sister-in-law, Aarti, was very worried about debt. “That’s all she could ever think of. She was even unable to eat properly. She was always anxious about the instalments. How much can a woman bear?” she asked.
Meena’s husband Jagarnath Yadav also works as a labourer in Delhi. Meena has four daughters. They have no other source of earning. Sometimes they manage to grow wheat in their submerged land.
She made it clear that the family was mired in debt ever since they were displaced after their agricultural land was destroyed by the river.
Dharmanath’s younger brother Sheshnath also undertook the construction of a house in the hope of availing himself of funds under the PM housing scheme but is now in debt. He said that his plot of land has “eight-foot deep pits.” To fill it, he had to spend Rs 65,000 on 130 trolleys of soil. It took five quintals of rebar and four trolley bricks to lay the foundation. In addition, it costs Rs 2.5 lakh to Rs 3 lakh to prepare the foundation alone.
His wife Rajal Devi borrowed Rs 2.5 lakh for this purpose from micro-finance companies. At present, he is paying Rs 12,000 per month as an instalment of this loan. Here too, their entire income is spent on repaying this loan.
Dharmanath’s elder brother Baijnath also works as a labourer in Delhi. His wife Gudiya has also taken loans from micro-finance companies. She pays three instalments of Rs 1,230, Rs 1,100 and Rs 1,270 every 15 days and one instalment of Rs 3,210 every month. He also used the loan amount to build a house but the house is still incomplete.
Across the village, a familiar story
Asha Devi, a Dalit resident of the village, had leased one bigha of agricultural land so that she could manage her household expenses through farming. She borrowed a loan of Rs 1 lakh from a micro-finance company to arrange fertilizer, water and seeds. To pay the instalments, she borrowed another loan of Rs 50,000 each from two companies. Now, she is paying instalments of Rs 2,700, Rs 1,230, Rs 805, Rs 2,030 and Rs 2,100 – that is a total of Rs 6,765 – every month, to repay the loans. She also had to give up the leased land. Her husband Virendra works in a scrap factory in Chandigarh. He had received money under the PM housing scheme. When the amount of Rs 1.2 lakh from the government fell short in the construction, he invested the loan amount taken from the micro-finance company as well.
Another local resident Guddi’s husband Sanjay Chauhan works as a labourer in Delhi. Guddi has availed four loans of Rs 50,000, Rs 35,000, Rs 45,000 and Rs 28,000 from micro-finance companies for which she has to pay instalments of Rs 1,230, Rs 860, Rs 2,410 and Rs 500 respectively. Guddi had to pay an instalment of Rs 2,410 on December 14 as well but she did not have the money. The micro-finance company’s agent started pressuring her to sell some household items to pay the instalment. When Guddi told him that she did not have any goods to sell, the agent forcibly seized her sewing machine worth Rs 5,000. However, when the news of Aarti’s death by suicide reached the village, the agent fled after leaving the sewing machine at Aarti’s house.
A group of 32 women in Mishrauli village are trapped in a web of debt from four to five micro-finance companies. The head of the group, Samintar Devi, took a loan of Rs 50,000 to buy a buffalo and then another loan of Rs 45,000. She said that the ‘group’ initially had 10 women but now 32 women are in it.
According to RBI guidelines, a creditor can neither threaten a borrower nor use abusive language to recover the loan. The creditor cannot call the borrower on the phone continuously and only call between 9 am and 6 pm. Also, relatives, friends and colleagues of the borrower cannot be harassed for loan recovery.
Also read: Big Talk, Small Action: Modi Govt’s Work on Women’s Empowerment in the Last 9 Years
Jewellery
The women of Mishrauli village said that the agents of the micro-finance company come to their houses with six to seven people and stay there until they get the money. They even reach their relatives’ houses and exert pressure to repay the loan amount by selling household items. After some instalments of the loan are paid, a new loan is issued. In this way, four to five micro-finance companies grant loans to women and get them entangled in a debt trap. The situation is such that more loans are being availed to repay the loans. They are also borrowing money from relatives and mortgaging jewellery and land.
Most of the women caught in this debt trap of micro-finance companies have had to mortgage their jewellery. Sumitra and Rajpati said that they had mortgaged four pieces of jewellery each while Laichi paid her loan instalment by mortgaging two pieces of jewellery for Rs 20,000. Guddi Devi has mortgaged her mangalsutra and anklets. Asha Devi also claimed that five of her jewellery pieces have been mortgaged. “There is not a single family here that has not mortgaged something or the other at the goldsmith’s shop. Once something is mortgaged, it is not even released,” she said.
Ajay Kumar Lallu, former state president of Congress and MLA of Tamkuhiraj, posted on X regarding this incident.
CPI (ML) leader Paramhans Singh, along with two other organisations, have released a fact-finding report on the incident of Aarti’s death. Local leaders have demanded the registration of a case of murder against the micro-finance company, the waiving off of all the loans given by such companies to the poor, compensation of Rs 50 lakh to Aarti’s family, and checking the licence of such companies as per RBI guidelines.
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 (www.spif.in/seek-help/) they can call to speak in confidence. You could also refer them to the nearest hospital.