Now, parliamentary panel to study suicide crisis

NAGPUR: A parliamentary standing committee will visit the farm suicide capital of Yavatmal on March 2. The 37-member committee, headed by Basudeo Acharya of CPM, will go to Pandharkawda and visit couple of villages to find out why farmers suicides continue unabated despite a plethora of measures taken by the government, providing relief to cotton growers of drylands of Vidarbha.

This is the first time that such a large team of parliamentary committee will be visiting the region. The visit comes in the wake of reports that the actual number of farmers committing suicides and found eligible for compensation by the government has actually tripled last year. There are also reports that the government may consider yet another relief package for dry-land farmers whose economic plight has worsened in the last six years and the cases of loan defaults have recorded an alarming rise in the region. Another round of loan waiver can only make them eligible for fresh bank credits in the next kharif season.

Vidarbha Jan Andolan Samiti, which is spearheading the cotton growers’ cause for over a decade, will be meeting the standing committee members during the visit to Pandharkawda. The panel members will be taken to nearby villages of Bhamraja and Maregon to study the ground realities. “Several such studies have been undertaken in the past. We only hope that the fresh attempt of the government will succeed in identifying the problem and ways to address it,’ said Kishore Tiwari, VJAS president, on Saturday. He lamented that recommendation of high-profile reports of M S Swaminathan who headed the National Agricultre Commissionand Prof Narendra Jadhav were never implemented.

“In 2006, the CM-PM package of Rs 5000 crore was followed by a massive loan waiver in 2008. As part of Rs 70,000 crore covering several states, Vidarbha region got a share of Rs 6000 crore. In 2009, the state government extended the loan waiver facility. Planning commissionexperts also visited the region and gave their report. In effect, a dozen such committees may have studied the farm crisis in Vidarbha. But a lasting solution to make agriculture sustainable has evaded the authorities till date,” said Tiwari. There are fresh worries that cotton farmers have fallen prey to monopolistic designs of multinational seed companies producing genetically modified seeds.

Micro finance giant SKS Under Spotlight in Suicides: Wall street Journal
Associated Press

MUMBAI, India — First they were stripped of their utensils,
furniture, mobile phones, televisions, ration cards and heirloom gold
jewelry. Then, some of them drank pesticide. One woman threw herself
in a pond. Another jumped into a well with her children.

Sometimes, the debt collectors watched nearby.

More than 200 poor, debt-ridden residents of Andhra Pradesh killed
themselves in late 2010, according to media reports compiled by the
government of the south Indian state. The state blamed microfinance
companies–which give small loans intended to lift up the very
poor–for fueling a frenzy of overindebtedness and then pressuring
borrowers so relentlessly that some took their own lives.

The companies, including market leader SKS Microfinance, denied it.

However, internal documents obtained by The Associated Press, as well
as interviews with more than a dozen current and former employees,
independent researchers and videotaped testimony from the families of
the dead, show top SKS officials had information implicating company
employees in some of the suicides.

An independent investigation commissioned by the company linked SKS
employees to at least seven of the deaths. A second investigation
commissioned by an industry umbrella group that probed the role of
many microfinance companies did not draw conclusions but pointed to
SKS involvement in two more cases that ended in suicide. Neither study
has been made public.

Both reports said SKS employees had verbally harassed over-indebted
borrowers, forced them to pawn valuable items, incited other borrowers
to humiliate them and orchestrated sit-ins outside their homes to
publicly shame them. In some cases, the SKS staff physically harassed
defaulters, according to the report commissioned by the company. Only
in death would the debts be forgiven.

The videos and reports tell stark stories: One woman drank pesticide
and died a day after an SKS loan agent told her to prostitute her
daughters to pay off her debt. She had been given 150,000 rupees
($3,000) in loans but only made 600 rupees ($12) a week.

Another SKS debt collector told a delinquent borrower to drown herself
in a pond if she wanted her loan waived. The next day, she did. She
left behind four children.

One agent blocked a woman from bringing her young son, weak with
diarrhea, to the hospital, demanding payment first. Other borrowers,
who could not get any new loans until she paid, told her that if she
wanted to die, they would bring her pesticide. An SKS staff member was
there when she drank the poison. She survived.

An 18-year-old girl, pressured until she handed over 150 rupees
($3)–meant for a school examination fee–also drank pesticide. She
left a suicide note: “Work hard and earn money. Do not take loans.”

In all these cases, the report commissioned by SKS concluded that the
company’s staff was either directly or indirectly responsible.

Caught in the despair of poverty, tens of thousands of impoverished
Indians kill themselves every year, often because of insurmountable

The supportive structure of the microfinance companies was supposed to
change that.

But Davuluri Venkateswarlu, director of Glocal Research in Hyderabad,
which conducted the industrywide investigation, said in an interview
that he told SKS executives there was “clear involvement of SKS
personnel” in some suicides.

SKS continues to deny all responsibility for the deaths and says it
never commissioned an independent inquiry. SKS spokesman J.S. Sai, who
flew to Mumbai from the company’s Hyderabad headquarters to discuss
the AP findings, said the company stands by its September 2011
affidavit before India’s Supreme Court. In that affidavit, chief
executive M.R. Rao says SKS “is neither the cause of nor responsible
for any suicides in the state of Andhra Pradesh.”

The deaths came after a period of hypergrowth leading up to the
company’s hugely successful August 2010 initial public offering.

Originally developed as a nonprofit effort to lift society’s most
downtrodden, microfinance has increasingly become a for-profit
enterprise that serves investors as well as the poor. As India’s
market leader, SKS has pioneered a business model that many others
hoped to emulate.

But the story of what went wrong at SKS has led current and former
employees and even some major shareholders to question that strategy
and raises fundamental questions for the multibillion-dollar global
microfinance industry.

Meanwhile, whistleblowers at SKS say that they have been targeted for
retaliation and that the company has failed to correct structural
flaws that contributed to the suicides.

“At the end of it,” said Alok Prasad, chief executive of the
Microfinance Institutions Network, the industry group that
commissioned the Glocal report, “you come down to a handful of cases
where some things went wrong. Is that indicative of the model being
bad or very rapid expansion leading to a loss of control?”

Microfinance was born in desperation. Amid the 1970s famine in
Bangladesh, Muhammad Yunus began giving small loans to poor women with
his own money.

Despite the predictions of bankers, the women paid him back.

The core idea of Mr. Yunus’ Grameen Bank was the borrower group. Five
women from a village determine how large a loan each member gets and
act as guarantors.

If even one member is delinquent, no new loans are issued. Group
members apply pressure–and support–that has kept repayment rates
near 100 percent.

Mr. Yunus’ innovation won him the Nobel Peace Prize in 2006.

In 1997, Yunus acolyte Vikram Akula founded his own microcredit
organization, Swayam Krishi Sangam, Sanskrit for “self-help
society.” In 2005, SKS started operating as a for-profit company and
Akula began chasing private investment to achieve the massive scale
required to dent global poverty.

In August 2010, SKS Microfinance–then India’s largest
microlender–went public. Exuberant investors oversubscribed the $350
million offering nearly 14 times. The stock surged more than 10
percent its first day. The company handed out 21,000 watches to
employees in celebration.

Then media reports began to surface that over-indebted borrowers were
killing themselves.

In October 2010, a mob of 150 people surrounded SKS’s Hyderabad
headquarters, protesting the suicide of a borrower’s husband. They
threatened to drag the corpse inside and demanded $20,000.

It was one of dozens of deaths the government of Andhra Pradesh blamed
on aggressive tactics by microfinance companies. Police jailed
microfinance employees, including dozens from SKS. Among the charges
was abetment to suicide, essentially driving people to kill
themselves, a crime under Indian law. Authorities investigated 76
cases in which employees from SKS and

other microfinance companies were blamed for driving borrowers to take
their own lives. The state passed a law designed to clamp down on
abuses with new restrictions on loan disbursement and collection and
onerous registration requirements on the companies. Microlending in
India’s largest microcredit market was effectively shut down.

Microfinance officials fought the new law and denied the charges,
accusing the state government of trying to gain traction with voters
and punish companies for capturing valuable market share from
state-run lending groups.

Established microlenders such as SKS said loan sharks operating under
the guise of microfinance were behind the excesses. SKS and other
companies asked a court to stop the arrest of their employees. The
court issued a stay on new arrests. Today, no one is in jail.

In a November 2010 letter to India’s finance minister, Mr. Akula
defended his company and included supportive articles from The Wall
Street Journal and the Financial Times.

At the same time, the industry group Microfinance Institutions Network
hired Glocal to investigate 44 deaths among debtors of microfinance
companies, including SKS.

Venkateswarlu, the Glocal director, presented the findings to
executives at three lenders. In January 2011, he delivered startling
news to Mr. Akula and Mr. Rao: SKS employees had clear involvement in
the suicides of four borrowers, meaning that their actions appeared
strongly linked to the subsequent deaths, according to their

The AP obtained a four-page section of the Glocal report that deals
with the SKS case studies. It related the financial history of
borrowers, the loans obtained, the nature of pressure or harassment
for repayment and the microfinance company involved. Venkateswarlu
verified that it was the material he presented to Mr. Akula and Mr.

“They said they’d look into the issue and take some appropriate
action,” Venkateswarlu said.

SKS sent internal audit teams to the field. Their reports exonerated
the company.

Unable to reconcile the two sets of findings, SKS hired Guardian’s
Human & Civil Rights Forum and Third Eye, a private investigative
agency, to do a more thorough, independent inquiry, according to
Ramesh Vautrey, head of administration at SKS, who oversaw the
investigation, and Rajender Khanna, the president of Guardian’s.

A Jan. 17, 2011, letter from SKS, signed and stamped by Mr. Vautrey,
asked Mr. Khanna to “carry out a fact finding enquiry on the causes
of suicide and complicity of our field staffs without any prejudice,”
according to a copy of the letter obtained by AP. The AP was shown
invoice numbers for SKS payments to Third Eye and emails indicating
the findings were sent to top management.

P.H. Ravikumar, who became interim chairman of the SKS board last
November, said neither management nor the board authorized an
independent inquiry into borrower deaths.

“Our enquiries from 2009 to 2011 have revealed that neither SKS nor
its employees have been the cause for any of the suicides in the state
of Andhra Pradesh,” the company said in a statement. The company also
said SKS employees have been acquitted in two borrower suicide cases
in Andhra Pradesh and that only one criminal case remains outstanding.

Mr. Khanna sent teams to speak with families of the dead, village
leaders, neighbors and loan agents, videotaping the interviews. Their
report said SKS employees bore direct or indirect responsibility for
at least seven suicides, including two that overlapped with the Glocal

The interview videos were shown to the AP by Uma Maheshwari, who said
she was present during one set of recordings and visited several of
the families personally. She left SKS in July.

In one video, the daughter of borrower Dhake Lakshmi Rajyam cries,
gasping as she talks to an investigator in Tadepalligudem, Andhra

Ms. Rajyam was unable to pay off $2,400 owed to eight different companies.

Employees of microfinance companies, including SKS, urged other
borrowers to seize the family’s chairs, utensils and wardrobe and pawn
them to make loan payments, her family told investigators. Unable to
bear the insults and pressure of the crowd of borrowers who sat
outside her home for hours to shame her, Ms. Rajyam drank pesticide on
Sept. 16, 2010, and died, the family


“We have lost my mother,” her daughter says. “Nobody will support us.”

The investigator’s conclusions lay the blame on SKS employees, saying
they failed to comply with company policies “and even basic moral

Mr. Vautrey said he sent the case studies to three top managers,
including Mr. Rao. Emails obtained by AP indicate that summary reports
were emailed to the managers.

Mr. Rao did not respond to multiple requests from AP seeking comment.

Mr. Vautrey went to Mr. Akula’s office one night and told him what
they were doing was bad karma.

“I don’t want to be part of a team abetting suicides,” Mr. Vautrey
said in an interview. “It is systemic failure. We have no right to
kill anybody for our own business. Let’s close down our business if we
can’t do it right.”

A profound shift in values and incentives at SKS began in 2008.

In October, Boston-based Sandstone Capital, now SKS’ largest investor,
made a major investment. It joined U.S. private equity firm Sequoia
Capital, which funded Google and Apple and is SKS’ largest
shareholder, on the board of directors.

Mr. Akula, who had been chief executive in the company’s early days,
stepped down in December 2008 but stayed on as chairman. The company
brought in new top executives from the worlds of finance and

SKS also began transferring more loans off its books, selling highly
rated pools of loans to banks, which then assumed most of the
associated risk of borrower default. That freed SKS to push out more
and bigger loans.

In December 2009, SKS launched a massive sales drive. The “Incentives
Galore” program ran through February 2010–just one month before the
company filed its IPO prospectus.

Agents won prizes worth up to 10 times their average monthly salary
for signing huge numbers of new borrowers. Mr. Vautrey said he
coordinated the shipment of 8,800 televisions, refrigerators, gold
coins, mixers, washing machines and DVDs as rewards for more than
3,000 districts nationwide.

One loan officer signed up 273 groups in a month. Under training
protocols, the ideal number of groups formed per month is 12, the
maximum is 36, according to field agents and reports written by Mr.

“The focus is only on targets,” Ramulu Sirgapur, who spent a decade
at SKS before he left in December, told AP. “Even if we’ve given
feedback, there might be recovery or repayment issues. That’s OK. Just
concentrate on growth.”

The result: Management had a great set of numbers to show investors as
it shopped the IPO. In a month, SKS could add 400,000 borrowers and
100 branches, and train more than 1,000 new loan officers. SKS had 6.8
million borrowers and had disbursed $3.2 billion in loans. India was
pimpled with SKS branches, which bloomed in nearly 100,000 villages.

SKS said it was the fastest growing microfinance company in the world.

But basic principles of lending were overlooked, according to
interviews with current and former employees, as well as
correspondence and internal PowerPoint presentations by Mr. Akula.

Six current and former SKS staffers with experience in the field told
the AP they no longer had time to check a borrower’s assets or follow
up and make sure a loan was put to productive use. They said that they
were pressured to push more debt onto people than they could handle
and that the number of days devoted to borrower training was cut in

“You have a (borrower group), and a loan officer goes out and trains
them, educates them, then they give the loan. That’s the SKS I’d seen
in 1999. That was the whole model on which microfinance is supposed to

In the quest for growth, a lot of these things got neglected,” said
Ankur Sarin, director of the SKS trusts, which are the fourth largest
shareholder in the company and tasked with looking out for borrower

As the relationships between heavily indebted borrowers and loan
agents broke down, it became harder to collect.

Frustrated agents began working together and going door to door to
collect, rather than taking payments only in public a company rule
designed to limit coercion. They began using other borrowers to
pressure defaulters into repaying.

“The growth was very rapid. That growth led to some suboptimal
outcomes,” said Ashish Lakhanpal, managing director of Kismet
Capital, one of SKS’s largest shareholders, who was on the SKS board
until October 2010. “Were there lapses? Absolutely.”

While the board was concerned about fast credit growth, the company
never believed it was harming borrowers, Mr. Lakhanpal said.

“Mistakes were made, but I find it difficult to believe there was
anything people did at a managerial level to encourage field officers
to do that,” he said.

In spring 2011, Mr. Akula began circulating a plan to spend $10
million to train financial counselors who would make sure clients
weren’t getting into too much debt and used their loans productively,
according to Mr. Sarin, Mr. Vautrey and others with firsthand
knowledge of the proposal.

The plan was never adopted.

Publicly, Mr. Akula continued to deny that SKS bore any responsibility
for suicides. “Whatever happened was due to external factors and was
not reflective of any fundamental flaw in our model,” he told India’s
Business Today.

Privately, Mr. Akula prepared a 55-page presentation for the board
that detailed the seven suicides that SKS’ outside investigation had
blamed on the company. The presentation showed how the pre-IPO push
for growth led to a systemic breakdown, and again urged core reforms
to restore training and lending discipline.

Board members received copies of Akula’s presentation at a July 26,
2011, meeting, said a former employee who helped prepare the material
and spoke anonymously for fear of retribution.

The minutes of the meeting, however, make no mention of the report.

“As per my notes, this was not part of the board proceedings,”
company secretary Sudershan Pallap wrote in a Sept. 26 email to Mr.
Akula, who had complained of the omission.

Ravikumar, who would become interim chairman when Mr. Akula resigned,
said the board was never informed that SKS employees were implicated
in any suicides, and denied Mr. Akula presented any such findings to
the board.

“There was no presentation from Vikram Akula at that board meeting.

This will be reflected in the minutes, as signed by Vikram Akula,” he said.

Ravikumar said the board reviewed reports from the Microfinance
Institutions Network, but none of them implicated SKS employees.

Mr. Akula continued to complain to the board that his presentation had
been ignored. He summarized his concerns about the company’s direction
in emails, obtained by the AP, to seven board members, including
Sequoia’s Sumir Chadha, Sandstone’s Paresh Patel and three independent
directors: Ravikumar, Harvard’s Tarun Khanna, and Pramod Bhasin, the
former chief executive of Genpact.

Mr. Chadha, Mr. Patel and Mr. Khanna did not respond to multiple
requests for comment.

Ravikumar declined to comment on what he said was personal correspondence.

Mr. Bhasin said reports claiming SKS bore responsibility for borrower
suicides were “unsubstantiated.”

“Any issues raised to the Board at various times were fully
investigated by external parties and found to be unsubstantiated or
without evidence or actions were taken on them where appropriate,” he
wrote in an email.

Rancor within the company was intensifying. Board members felt Mr.
Akula was suffering from a bad case of “founder’s syndrome,” that he
couldn’t stand to share power at a company that had become too big for
him to run.

Finally, on Nov. 23, 2011, Mr. Akula resigned.

Mr. Vautrey said he was targeted, and SKS began termination
proceedings against him on Feb. 6. Three members of his staff have
been fired and have filed wrongful termination complaints with the

On Feb. 6, SKS also sold 2.43 billion rupees ($49 million) in
securitized loans. The stock price surged 10 percent. Top executives
have been on the road, hoping to raise 5 billion rupees ($100 million)
from international investors.

Mr. Sai, the company spokesman, said SKS has hired an ombudsman, is
spending $3 million to improve its customer grievance program and has
revamped training to ensure that employees comply with current
regulations and do not lend to over-indebted borrowers. He said the
company would like to reorganize incentives to maintain rapid growth
while ensuring loan quality. Those changes have yet to be implemented,
he said.

Farmers’ suicides tripled in 2011: Attention of PMO sought

Government figures of farmer suicides in Vidarbha’s agrarian crisis hit cotton belt of western districts for year 2011 has shocked the local media and civil society after a national daily reported that figures compiled by government at Yavatmal district in Maharashtra- the epicenter of the agrarian crisis.

THE SHOCKING figures completely contract earlier reports of the Government of India and Mahrashtra Government in 2011 – as suicides commited due to agrarian crisis tripled as compared to the last year.

In Yavatmal district as against in 2010 administration confirmed 35 farmer suicides due to agrarian crisis, and all are eligible for government compensation whereas in 2011, 76 suicides were declared – which is more than twice the number of suicide cases reported the last year – reflecting the seriousness of the vidarbha crisis even after a series of relief packages and the Prime Minister’s visit to Vidarbha in July 2006. 

Hence Vidarbha Janadolan Samiti (VJAS) activist group, working for farmers’ rights in the region since 1997, and demanding the complete rehabilitation of farm widows and kids of farmers families who committed suicide. The group has written a letter requesting the prime minister to provide long term solution to the crisis and integrated solution to the vidarbha agrarian crisis.

Kishor Tiwari convener of VJAS, said in a press release that due to farm crisis since 2000, 2,332 farmers have committed suicide in Yavatmal. Out of which 714 have been declared to be due to farm. Tiwari has urged the PMO to review all cases in light of the changed norms.

The Indian government claims to spent more than Rs.5,000 crore apart from Rs.70,000 crore national loan waiver, which has given additional Rs.8000 crore to the package in 2006 and 2008 but there has been no change in the agrarian economy and the rate of farm suicides in the region has exposed total failure of the Indian government to solve the agrarian crisis in dry land regions of Maharashtra.

Farmers’ suicide on rise in Bengal; parties blame each other

by Manogya Loiwal

January 04, 2012

Farmers’ suicides have come back to haunt the West Bengal government. Unable to handle the rising inflation, several farmers have committed suicide recently.

In some parts the agriculture produce is being set ablaze due to lack of basic storage facilities, pointing at the abysmal condition in the state.

However, despite the crisis the state government has turned a blind eye to the farmers’ problems. Food and Supplies Minister Jyotipriyo Mullick said the recent suicide in the state was not due to falling crops but due to mental depression among the farmers. He claimed the farmers in Bengal were rich enough to buy high and mighty of Kolkata.

“Farmers should not been shown in bad light… that they are very poor. Farmers in Burdwan have 100 bigha of land. They can keep Buddhadeb and Pradip in their pockets,” Mullick said.

Farmers cite lack of storage facility

But when Headlines Today travelled to Burdwan — one of the worst hit areas of state — the farmers had something else to say. Facing a crisis due to infrastructure mismanagement on part of the state authorities, the farmers said they were unable to get even the minimum cost for their produce as most part of it got wasted due to lack of enough cold storage facility in the area.

“If the government will make some provisions to export the crop then the farmers’ suicide can be reduced. If government does not take proper action, more people will commit suicide,” warned a farmer.

Another farmer said, “The farmers have no other source of income. The state government is not doing anything at all.”

“If the farmers will not make any profit by selling their crops then it is definitely going to take a toll on them as a result of which more and more farmers will commit suicide,” said yet another farmer.

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Over 290 farmers died in past three months: HRF

HYDERABAD: The Human Rights Forum has urged the state government to formulate a comprehensive Drought Relief Code to provide effective drought relief and mitigation.
“Such a code is imperative because governments continue to exhibit an adhoc nature and tokenism in providing relief towards droughthit people,” HRF general secretary VS Krishna and secretary Anwar said in a statement on Sunday.
The HRF teams which visited 47 villages in nine droughthit districts, where farmers have committed suicide, have estimated that not less than 290 farmers have ended their lives over the past three months. “Over 90 per cent farmers taking their own lives are from the rainfed districts of Telangana and Rayalaseema. Cotton farmers in Telangana and groundnut farmers in Rayalaseema account for the maximum farm suicides,” the HRF members said.
“Farmers are taking their own lives because of the appalling state of institutional credit leading to excessive reliance on private moneylenders. The drying up of public credit because of ‘banking reforms’ is the single most important contributing cause of farmer suicides. Farmers also lack access to reliable and reasonably priced inputs and proper remunerative price for their output,” VS Krishna said. Apart from notching up the number of droughthit mandals at periodic intervals, the government is doing precious little by way of concrete relief. “Even implementation of the GO 421, which provides for an economic and rehabilitation package to family members of farmers who ended their lives, is pathetic. The RDOheaded verification and certification committee is barely visiting villages where suicides have taken place,” they said.
The HRF members urged the government to stop underplaying the extent of the agrarian crisis and initiate concrete steps to solve the problem. “All cultivators, including tenant farmers must be brought into the ambit of institutional credit. If concrete measures are not forthcoming, there might be a suicide epidemic in the coming year,” they warned.