Microloans, also called microfinances. Very popular in developing countries in South Asia, and also the same thing that is responsible for the suicide epidemic of farmers in India. With high interest rates and fixed time-period constraints, they’re the most cruel and fucked up things to ever exist, they’re worse than indentured serfdom.
I’d like to add that there are good versions of “microloans”! I learned that there used to be (or still are, didn’t check) non-profit " banks" in some parts of India (and South africa I think) that would give out small loans of a few dollars to a few hundred dollars (which can be quite a lot of money in India). There was no collateral and low interest, but a group of people had to apply for a loan together. Until the first loan was paid back, the rest of the group couldn’t apply again.
It was meant to provide financial backing and capital to microbusinesses (e.g. fishers, farmers, peddlers) that would otherwise be excluded from the financial market due to a lack of collateral and otherwise be forced to take high-interest loans.
SHGs (which is what you’re talking about, also called SBLP in some places) are not a majority, their lenders/borrowers are often people within the same marginalized group, and it is very slow, so people tend to avoid them. MFIs dominate the microloan industry, and they’re very exploitative.
Back in the day, a loan shark was a criminal who charged an outrageous 20% interest for money. Working class folks were at the mercy of these “six-for-fivers.”
Ronald Reagan became President and now established banks could charge 35% or more.
Yeah, a factory worker would get $5 and pay back $6 the next week. That was a terrible crime. Then Reagan deregulated the banks and it became business as usual.
Microloans, also called microfinances. Very popular in developing countries in South Asia, and also the same thing that is responsible for the suicide epidemic of farmers in India. With high interest rates and fixed time-period constraints, they’re the most cruel and fucked up things to ever exist, they’re worse than indentured serfdom.
I’d like to add that there are good versions of “microloans”! I learned that there used to be (or still are, didn’t check) non-profit " banks" in some parts of India (and South africa I think) that would give out small loans of a few dollars to a few hundred dollars (which can be quite a lot of money in India). There was no collateral and low interest, but a group of people had to apply for a loan together. Until the first loan was paid back, the rest of the group couldn’t apply again. It was meant to provide financial backing and capital to microbusinesses (e.g. fishers, farmers, peddlers) that would otherwise be excluded from the financial market due to a lack of collateral and otherwise be forced to take high-interest loans.
SHGs (which is what you’re talking about, also called SBLP in some places) are not a majority, their lenders/borrowers are often people within the same marginalized group, and it is very slow, so people tend to avoid them. MFIs dominate the microloan industry, and they’re very exploitative.
Thanks for the info! I didn’t think they were widespread, but figured they might be a bit wholesome and would light up this thread :)
Sounds like ‘pay day loans’ in the US.
Back in the day, a loan shark was a criminal who charged an outrageous 20% interest for money. Working class folks were at the mercy of these “six-for-fivers.”
Ronald Reagan became President and now established banks could charge 35% or more.
(Looks at my credit cards)
Yall got any more of that 20% interest?
Yeah, a factory worker would get $5 and pay back $6 the next week. That was a terrible crime. Then Reagan deregulated the banks and it became business as usual.
To be fair, usury is much older plague than capitalism, but it’s been one of capitalism roots, and capitalism cranked it up incredibly.