Patna, December 31, 2025 – Bihar, India’s poorest state and largest microfinance market, faces a devastating debt crisis where loans meant to uplift women have become instruments of despair and death.(Bihar Microfinance Debt)
Siyaram Saw, a 48-year-old paralyzed resident of Patna’s Sahkari area, ended his life after a microfinance recovery agent snarled, “I want the money today, whether you live or die,” his family recounted. This tragedy exemplifies a surge in suicides linked to high-interest loans and coercive collections, with at least 20 cases reported across districts like Muzaffarpur, Patna, and Darbhanga in the past 18 months.
Microfinance institutions (MFIs) like RBL, Sonata Finance (under Kotak Mahindra), and others have flooded rural Bihar with credit, targeting women self-help groups (SHGs) for loans up to ₹40,000 at 24.5% interest—translating to ₹12,000 extra per loan over two years. What began as financial inclusion post-1992 has devolved into over-indebtedness: borrowers take multiple loans (up to four lenders) to repay prior ones, breaching RBI’s 2022 guidelines capping repayments at 50% of household income (under ₹3 lakh annually). By March 2025, Bihar’s ₹57,712 crore portfolio saw 7.2% overdue >30 days—worst nationally—versus India’s 6.2% average.
Tragic Human Cost
Recovery agents, under 100% collection pressure, resort to late-night visits, public shaming, and threats, fracturing families. In Muzaffarpur, Gudiya Devi (35), mother of three, consumed poison after agents harassed her over a nearly repaid ₹1.5 lakh loan; her husband Pintu alleged constant pressure despite timely payments. Another case saw Amarnath Ram and his three children hang themselves amid similar torment. Even MFI employees succumb: In March 2025, Patna staffer Ananya’s suicide note read, “The company is not good. It doesn’t matter if someone dies.”
Experts attribute this to lax regulation despite MFIN’s July 2024 caps (four lenders max, ₹2 lakh exposure). Sa-Dhan data shows portfolio-at-risk (PAR >30 days) jumped from 2.1% (2023-24) to 6.2% (2024-25), with rural Bihar hit hardest at 6.4%. Women, primary borrowers for homes and education, bear the brunt, turning “saviours” into “new sahukars” (moneylenders).
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Systemic Failures Exposed
Bihar’s microfinance boom—highest outstanding loans nationally—stems from aggressive lending targets (e.g., ₹5 lakh daily per agent) without repayment checks. Defaults surged amid crop failures, inflation, and welfare cuts, pushing households into vicious cycles. RBI’s framework aims to protect low-income groups, but enforcement lags; agents violate norms with coercive tactics far beyond boundaries.
Activists like Meena Tiwari of CPIML’s All India Progressive Women’s Association decry the “structural violence,” urging state intervention. Borrowers report door-breaking and humiliation, echoing Kushinagar cases where agents barge in.
Urgent Calls for Reform
Stakeholders demand stricter RBI oversight, interest caps, and grievance portals, as detailed in The Print’s in-depth ground report on Bihar’s microfinance crisis. MFIN claims 90% homes now pucca due to microfinance, but critics counter exploitation kills the “golden goose,” echoing expert analysis from RBI Chair Professor Rabi Narayan Mishra. Government must revive welfare, cap multiple lending, and prosecute rogue agents to reclaim microfinance’s promise.
Bihar’s crisis signals national risks: With delinquencies at 4.8% (>90 days), unchecked growth threatens millions. Read the full investigative report here.
Government Response Lacking Amid Rising Deaths
Despite mounting tragedies, Bihar government intervention remains elusive, with Finance and Rural Development ministries silent on the crisis despite repeated appeals. JEEViKA’s self-help groups offer limited relief compared to MFIs’ aggressive expansion, while schemes like Mukhyamantri Mahila Rozgar Yojana’s ₹10,000 transfers vanish into daily survival costs. Experts warn without immediate RBI-mandated audits, credit bureau enforcement, and criminal probes into recovery abuses, Bihar microfinance debt will claim more lives—potentially 100+ suicides by mid-2026 if PAR hits projected 10%. The state must prioritize borrower protection over lender profits to prevent a humanitarian catastrophe in India’s largest microfinance market.
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