Where Angels Prey

by Ramesh S Arunachalam

  The ordinance had also received the overwhelming support of the political classes—always eager to position themselves as champions of the poor, who formed the bulk of their vote bank. Enthused by the bureaucratic and political support, many of the poor clients flatly refused to repay their outstanding loans; some even turned violent with the collection agents. It was a delayed response to the exploitative practices adopted by the MFIs. However, they had not been ready to face the consequences of their actions. The outstanding loans, default history and poor credit rating made them unworthy in the eyes of credit bureaus. As a consequence, the millions of poor in Andhra Pradesh, whom the ordinance had hoped to protect, had ended up having defaulter labels stuck on them and found themselves completely excluded from the ambit of formal credit.

  “The moneylenders are back! They are back again!”

  This had been the refrain on the ground during his recent travels across the state. The poor had had to turn, yet again, to informal sources, and the much reviled moneylender made a triumphant return. In essence, all the combined efforts of the past had ended up driving the poor into the clutches of the very forces that they had sought to rescue them from. They were back to where they had been—or perhaps, they were even worse off, for their hopes had been built up in the interim, only to be belied. They had lost faith in the system that only seemed to push them further into an abyss of despair and exploitation. The knights in shining armour had turned out to be knaves and their trust and confidence had been shattered.

  The information that Chandresh received a short while ago only served to corrode any remnants of confidence in the system and hope for justice.

  Realizing that he is not going to get any work done in the black mood that he is presently in, Chandresh decides to step out for a smoke.

  He strolls over to the tea shop across from the hotel. After asking for a cup of strong tea, he lights up and takes a deep puff on his cigarette. His eyes are drawn to the bench by the side of the shop and he recalls his meeting with the old Maoist during his last visit. It feels almost like another lifetime now.

  He vividly recalls the flash of anger in the old man’s eyes as he spoke of his landlord and his exploitative ways. The larger problem had remained: the lack of equitable access to resources had been the bane of the poor then and remained so now. The oppressors, like shape shifters, merely changed in form over time. Given the lack of access to education and resources, the poor continued to be at the mercy of these forces in their various forms.

  As Chandresh stares moodily at the bench that he had shared with the old Maoist, his phone rings. Bob’s voice booms into his ear.

  “Hey Chan, I have some real good news for you!”

  In his current sluggish frame of mind, Chandresh cannot think of a single reason for cheer.

  “Hello Bob, good to hear you’re in such high spirits. I sure could use some cheering up right now!”

  “Chan, is everything alright? Is there a problem? Anything I can do to help?”

  Chandresh smiles in spite of himself.

  “Nothing more than a bout of professional blues, Bob. But go on...spill the beans?”

  “I have just the news to dispel the blues, Chan. Our story has been nominated for the Simpson prize in the best investigative report category!”

  Chandresh is not sure how to respond. Little does Bob know, he just added to his dark mood.

  “Oh really...I suppose that is a good thing then.”

  There is a pause as Bob possibly tries to process Chandresh’s unenthusiastic response.

  “Chan, what is going on?”

  “Nothing much, Bob. In fact, nothing at all. The sector’s activities in the state have come to a grinding halt. The poor are being excluded by formal financial institutions all over again, and, guess what, the oppressive, usurious informal moneylender is back in business.”

  There is another pause—this time Bob is at a loss for words.

  “I wouldn’t go so far as to say that our report made this happen—that would make me delusional—but I am left wondering what we...I mean, what our report has really achieved. Like an old man once told me: You probably get paid well for your efforts and maybe even get some awards. But that’s not much comfort for the people whose miseries you bare in print.”

  Chandresh closes his eyes, fighting against the tears of impotent rage that threaten to spill out.

  “Chan, I assume you are referring to Nageshwara Reddy making an entry back into your central Cabinet. The gross illegality of transactions we exposed, the wilful attempts to subvert due process, all of it was made to bite the dust in the face of political expediency! Believe me, this is hardly the first time I have seen my efforts serve no great purpose.”

  Chandresh laughs dryly.

  “You haven’t heard it all, Bob. There is more good news in store.”

  Chandresh can almost hear Bob’s mind racing as he speculates on Chandresh’s words.

  He takes a deep breath before he delivers the coup de grace.

  “SAMMAAN and DevEx have both been granted banking licenses. They’ve been reinstated with greater powers and glory so they can have another go at their aborted agendas. It’s business as usual for Kamineni, Kumudini and their brethren, Bob! Long live truth and justice!”

  Endnotes

  1. A Joint Liability Group (JLG) typically consists of five to ten women who are lent money under a microfinance initiative.

  2. Melas are socio-economic congregations, where all and sundry get loans en-masse usually without any serious analysis by the lenders of their clients’ ability to service their debt.

  3. A group of Naxalites—usually sixteen people—that functions and travels as an integrated unit.

  4. Well-known Indian actress who often performs macho roles in Telugu and Tamil films.

  5. In 2005–6, the microfinance sector in Andhra Pradesh was subject to a huge crisis in the Krishna and neighbouring Guntur districts and many allegations were made against MFIs with regard to charging of high interest rates, use of coercive repayment tactics, over-lending, physical abuse of clients, etc.

  6. Qualified institutional placement (QIP) is a capital-raising tool, primarily used in India and other parts of South Asia, whereby a listed company can issue equity shares, fully and partly convertible debentures, or any securities other than warrants, which are con- vertible to equity shares to a qualified institutional buyer (QIB). Apart from preferential allotment, this is the only other speedy method of private placement whereby a listed company can issue shares or convertible securities to a select group of persons. QIP scores over other methods because the issuing firm does not have to undergo elaborate procedural requirements to raise this capital.

  7. MBTs or Mutual Benefit Trusts are akin to private trusts and there is a lot of controversy surrounding their governance in microfinance in India.

  ABOUT THE AUTHOR

  Ramesh S Arunachalam wears many hats. In the last two decades, he has been a columnist (with the Hindu Business Line and Moneylife), an entrepreneur, a filmmaker and also a development practitioner working on issues pertaining to financial inclusion and livelihood security. His clients include both state and national governments, bi-lateral and multi-lateral agencies, and the private sector in countries across Asia, Africa, North America and Europe.

  Praise for Where Angels Prey

  “Where Angels Prey is an engaging and touching story of the collision of altruism and aspiration. Its narration of how the Indian rural poor suffer from this collision, in the context of the spectacular growth and equally spectacular crisis of the Andhra Pradesh microfinance industry, shocks and moves. I found it a most enjoyable, but also most disturbing, read!”

  Matthew Gamser, CEO, SME Finance Forum, InternationalFinance Corporation, Washington DC, USA

  “During the very spectacular implosion of microfinance in Andhra Pradesh in 2010, Ramesh Arunachalam was merciless in his analysis. Combining field trips, secondary research and his experience in the
rural development space, he stripped bare the malaise in the sector. It is excellent that he has now parsed all that knowhow into this racy entertaining novel.” M Rajshekhar, Senior Journalist, Scroll.in and former Senior Assistant Editor (Rural India, Environment),

  The Economic Times

  “This novel is a brilliant piece of work from a person who has seen at close quarters the microfinance industry’s rise and fall in Andhra Pradesh. The plot, fit for a movie, is beautifully woven into all the happenings that have plagued the sector. It makes for such a compelling read that it can’t be put down even once!” Madhusudhan Lagisetty, Assistant Vice President,

  Tata AIG Life Insurance Co Ltd

  “Money is trust encrypted; the story of how it can be used to destroy trust in the name of the poor is vividly portrayed in this highly entertaining book…the title says it all.” Al Fernandez, Chairman NABFINS Ltd and Padmashree Awardee 2000

  “Where Angels Prey is art imitating life ... a great read the first and the second time around.” Jami Solli, Executive Director of the Global Alliance for Legal Aid (GALA), USA

  “Really enjoyed the novel Where Angels Prey.... Its unique plot and fast pace make it a very entertaining and smooth read.” Prof M S Sriram, formerly Professor at IIM (Ahmedabad) and currently Visiting Professor at IIM (Bangalore)

  “Where Angels Prey is wonderfully written and captivating. I thought I’d read a chapter, but the narrative was so gripping I went through the whole book at one stretch.” V Ramamurthy, I.A.S. (Retd), 1959 Batch

  “Where Angels Prey pulls and absorbs you into its plot and holds you there from start to finish.” Joy Deshmukh-Ranadive, Global Head, Corporate SocialResponsibility, Tata Consultancy Services

  “A Brilliant Read—Where Angels Prey blurs the line between fiction and truth. From a man who understands money as well as anyone I know, this book paints the two worlds that wrestle in India in the 21st century. Descriptive, taut, with well-etched- out characters, and most importantly entertaining. This book is crying out to be made into a film!” Anshuman Jha, Actor

  “Riveting…. Designed to be the ideal solution to meet the financial needs of the poor, somewhere the microfinance sector decided to change course to be in the commercial, profit-making zone, placing millions of lives at the risk of failure and complete bankruptcy. Many sector leaders became the same demons, if not worse, that they swore to slay. The book beautifully highlights the interconnectedness of issues and actors, helping the reader analyse the situation on the ground and questioning many of the so-called ‘accepted’ truths. Congratulations to Ramesh for having successfully converted his long-standing experience with the sector into a gripping narrative that will have readers asking for much more.” Moutushi Sengupta, Director–India,

  MacArthur Foundation

  “From rural Andhra Pradesh to the shiny lobbies of Wall Street, this financial thriller is a must read for everybody. Don’t worry if you’re not familiar with microfinance because Ramesh Arunachalam breaks down the concepts and the scams associated with microfinance in this entertaining saga. This book boasts of Arunachalam’s sheer brilliance as a writer and as a financial expert. Smooth, fast and nail-biting! I wonder when the movie is going to be out!” Anand Bhaskar, Musician

  “Fantastic storyline, but startlingly realistic; written racily, yet in impeccable English. Interweaving fact and fiction, this novel is a creative and compelling read.” G R Swaminathan,

  Assistant Solicitor General of India

  “No one doubted the power of microfinance in pulling millions out of poverty. But, a spate of suicides by the borrowers in 2010 raised more questions than answers. For an inside story of what happened and why, you don’t need to go farther than this brilliant yet entertaining novel, which is so hard to put down. Ramesh’s idea to write the microfinance story as fiction is ingenious. The intrigue behind the rise and fall of the sector could be brought out no holds barred. It’s a must read. Like one of the characters in the book said, ‘We owe it to them—to each of those fifty plus people who have been robbed of their lives, and to the hundreds of thousands of others whose trust has been violated’.” S Sivakumar, Architect, ITC e-Choupal

  “Where Angels Prey is really an excellent read! This graphic exploration of the once universally-lauded microfinance industry is bang on target. It works not just as a great read but as something to make you think a little deeper along the way. Written with flair, verve and a superb eye for detail—which is not surprising as Arunachalam is India’s leading microfinance analyst—this gripping novel is a trip into the darker side of the poverty industry as it rampages and careens through the lives of the poor under cover of actually helping them. I look forward to the film in due course—it will be India’s very own ‘Wall Street’!” Milford J. B. Bateman PhD, Freelance consultant on localeconomic development, Visiting Professor of Economics, JurajDobrila at Pula University, Croatia and Adjunct Professor ofDevelopment Studies, St Marys University, Halifax, Canada

  “This rip-roaring piece of fiction races the reader through the halls of the Mumbai and New York Stock exchanges and into the villages of Andhra Pradesh. Where Angels Prey exposes the worst of what can happen when commercial interests and desperation collide: a train wreck tragic in every way. At the heart of the story, as two journalists work unstoppably to interpret a rain of motives, they uncover why and how the angels prey.” Kim Wilson, Faculty, The Fletcher School, Tufts University

  The endorsements expressed in this book are strictly opinions of the individuals concerned. They are not the views of the organizations/institutions that these individuals represent and/or positions that these individuals hold.

  First published in India in 2015 by:

  Ramesh S Arunachalam

  rameshsa2009@gmail.com

  Copyright © 2015 Ramesh S Arunachalam

  Print Book Indian Edition ISBN: 9789384439347

  Print Book International Edition ISBN: 9789384439378

  eBook ISBN: 9789384439361

  Ramesh S Arunachalam asserts the moral right to be identified as the author of this work.

  Publishing facilitation: AuthorsUpFront

  Cover design: PealiDezine

  This book, Where Angels Prey, is a work of FICTION loosely inspired by events that took place in the microfinance sector in India and also other parts of the world. Therefore, the names, characters, businesses, places, institutions and incidents are primarily the product of the author’s imagination and resemblance (if any) to actual persons, living or dead, or actual institutions is purely coincidental. This book of FICTION does NOT purport to be a direct representation and/ or depiction of any particular individual/MFI/institution in India or elsewhere, existing or past.

  All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior written permission of the AUTHOR, or as expressly permitted by law, or under terms agreed with the appropriate reprographic rights organisations. Enquiries concerning reproduction outside the scope of the above should be sent to the AUTHOR.