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Forty-five-year-old Shabreen (name changed) lives with her two sons and three daughters in a hovel near Faridabad, Haryana. At one point, she ran this household of six while working as a nurse. These days, her oldest son is the main earner, while she and her daughters do odd jobs apart from household chores. The slum that they reside in is in an area that floods for about a month every five years; as it did in September 2025, when the National Capital Region (NCR) experienced heavy unseasonal rains.

Most houses here have tiny rooms and are generally a couple of stories tall, accessible by narrow, muddy paths. The homes are surrounded by small hills of garbage. After every flood, parts of the buildings are destroyed, incurring significant renovation costs, especially on the electrical and plumbing lines.

The first time Shabreen took a loan was to build her house. She explained how they bought the small piece of land in the colony by taking out a loan from their neighbouring money-lenders (whom she refers to as ‘the Gujjars’), just before her oldest daughter’s marriage.

Also read: Women Bear the Burden of India’s Debt Crisis: Study

They used the loan to build part of the house, after which she borrowed Rs 30,000 in 2019 from Jana Bank, a Small Finance Bank (SFB). In 2021, she borrowed another Rs 60,000, repaying it entirely by 2023 – a total of Rs 1.3 lakh on a cumulative principal of Rs 90,000. Later that year, she borrowed Rs 30,000 from Satin Creditcare Network Limited, a microfinance institution (MFI), followed by an additional Rs 70,000, towards which she continues to pay a monthly EMI of Rs 3,400.

Illustration of the loans taken out by Shabreen. (Samali Banerjee)

What are Small Finance Banks?

SFBs were launched in 2014 with one key distinction from Non-Banking Finance Companies (NBFC): the ability to hold demand deposits, which customers can withdraw at any time.

In practice, their lending operations are nearly identical to those of NBFCs or MFIs – supplying credit to small businesses, marginal farmers and unorganised sector entities through what they call high-tech, low-cost operations. Low cost here refers to the lender, though, not the borrowers.

Many SFBs, including Jana Bank, charge steep interest rates, which are justified as necessary incentives to lend these collateral-free amounts to “high-risk borrowers”.

The top five Scheduled Commercial Banks, Small Finance Banks and Non-Banking Financial Companies, along with the interest rates they charge per annum on personal loans. (Samali Banerjee, from public documents)

According to a report by the Microfinance Institutions Network, almost 99% of clients – the borrowers – are women. This is done under the guise of women’s ’empowerment’ and ‘increasing access to credit’. Yet it is consistently evident across conversations with the women borrowers that the men of these households are the decision-makers regarding how the borrowed money would be spent.

In reality, women also have far fewer resources to ‘abscond’ from........

© The Wire