Indian state reopens debt, suicide probes

MUMBAI, India -- A southern state is actively investigating 76 criminal cases against employees of Indian lenders accused of driving overindebted borrowers to suicide, officials said yesterday.

Andhra Pradesh, which was India's largest microfinance market, blamed a spate of suicides in late 2010 on aggressive lending and collection tactics by such companies. The companies denied responsibility.

R. Subrahmanyam, principal secretary for rural development in Andhra Pradesh, said his department had sent teams to villages to assist police. Some of the cases may have been closed or stalled, he said.

"If they stumble on good evidence, they can always be reopened," he said, adding that police are often overburdened and may not have always found the "correct lead." There have been no convictions, and after scores of arrests earlier, no microfinance company employees are currently in jail, according to Andhra Pradesh officials.

The government decided to reinvigorate the investigations after an Associated Press story showed that, despite denials, top officials from SKS Microfinance had information from a report commissioned by the company implicating its employees in borrower suicides.

But SKS stands by its affidavit before India's Supreme Court that it "is neither the cause of nor responsible for any suicides in the state of Andhra Pradesh."

SKS is a market leader in India's microfinance industry, which specializes in small loans intended to lift up the very poor. SKS employees were named in 15 of the 76 cases, the company said.

Another report commissioned by industry group Microfinance Institutions Network last year found evidence linking the actions of employees from four leading companies, including SKS, with 13 borrower suicides or attempted suicides, according to Davuluri Venkateswarlu, the director of Glocal Research in Hyderabad.