MicroSave conducted this study to examine the impact of the Andhra Pradesh crisis on borrowers, by collating client experiences, opinions and needs so as to help policy makers and key actors to devise solutions suited to client requirements. The study found that most clients have been forced to return to, or further expand their dependence on, moneylenders. The SHG-based system is too cumbersome and lends too little to sustain the businesses and other financial requirements of households used to accessing rapid and relatively large amounts of credit from MFIs in Andhra Pradesh.

In 59% sessions, respondents said that they have taken loans from moneylenders in the absence of loans from MFIs. The next most used source of credit for the respondents was the SHGs (37%) and “daily finance corporations” – another form of money lenders – (29%).
24% of respondents who had plans for business expansion have postponed them as access to credit had become difficult. Many (32%) respondents said that they had reduced the scale of their business because of lack of access to alternate sources of credit. In 12% of the sessions respondents said that they sold their assets such as house, vehicle, cattle, jewellery etc., to meet their productive (agriculture related expenses) as well as essential non-productive expenditure (school fees, marriage etc.).

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