This is the dark side of micro-credit in a country where it is said to have done wonders to lift millions out of poverty.
A BBC investigation has revealed scores of poor in Bangladesh are turning to selling organs to pay off micro-credit lenders who charged exorbitant interests.
“In an attempt to alleviate poverty, countless numbers take on debt with micro-credit lenders, only to find themselves in a difficult situation where they are unable to repay the loan,” says the BBC report by Sophie Cousins.
“Some have even turned to selling their organs as a last resort to repay the loans and escape the vicious circle of poverty.”
The report points to the irony — “These lenders were originally set up to help lift people out of poverty by offering small loans to people who do not qualify for traditional banking credit, to encourage entrepreneurship and empower women.”
It points to the vicious circle — the repayment structure of micro-credit lenders and the apparent inability of these institutions to determine whether they have multiple loans to repay with other institutions.
“Consequently, it can create a vicious cycle in which borrowers borrow money from other NGOs to repay existing loans, leaving many unable to repay and some to take extreme measures such as selling organs to make repayments,” says the BBC report.
It details many such cases — mostly from the village of Kalai in Joypurhat district.
Monir Moniruzzaman, who has researched the organs trade in Bangladesh, has been quoted in the report as saying that many of those he interviewed after they had sold their organs had done it because of being under pressure to repay loans to micro-credit lenders.
“One of the sellers said he had left the village because he could not face the NGO officials,” Monir said. “The social and economic pressures from NGOs were unbearable so he decided to sell his kidneys.”
The two largest micro-credit lenders in Bangladesh, BRAC and Grameen Bank (so long headed by Nobel laureate Muhammad Yunus), have denied the charges of pressurising borrowers.
Grameen Bank and BRAC say they do not pressurise their borrowers to pay back.
BRAC’s Mohammed Ariful Haq told the BBC that ‘repayment of clients is not a big issue’.
So did Grameen’s acting Managing Director Mohammed Shahjahan. “Most borrowers have savings in their accounts more than or equivalent to at least 75% of their loan amount.”
But their interest rate was exorbitant — far higher than what the banks charge.
BRAC, one of the largest development organisations in the world, charges 27%, while Grameen charges 20% for micro-credit lending.
The BBC report quotes recent research to say that “the industry’s loan repayment structure combined with the infrequent income of rural Bangladesh can cause problems”.
Though the World Bank claims micro-credit’s benefits outweigh accumulated debts and a study says it has lifted 10 million Bangladeshis out of poverty, another research quoted in the report says only 7% of the borrowers were able to cross the poverty line between 2006-07.