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India’s Borrowers Bleeding Under High Interest & Legal Misuse, Warns
AIFBF

Bengaluru, 18 September 2025: The All India Federation of Borrowers
and Farmers (AIFBF) has warned that India’s 75 crore borrowers are
“bleeding silently” due to a toxic combination of exorbitant interest rates
and misuse of legal provisions by financial institutions.


Speaking at a press conference held at Legislators’ Home Building,
Bengaluru, the Federation called for urgent reforms to protect farmers,
students, transporters, MSMEs, and entrepreneurs who form the
backbone of the economy.
Shri Dayananda, Former MLC and Chairman & MD of AIFBF, said India’s
interest rates are 400–600% higher than competing nations, making
credit unsustainable for small and medium businesses. “At such rates, no
borrower can survive, let alone thrive. Borrowers are being stripped of
dignity and hope, while banks reap record profits,” he said.
The Federation also condemned the misuse of laws under the Insolvency
and Bankruptcy Code (IBC) and the arbitrary declaration of NPAs within
90 days, which have forced many viable companies into premature
liquidation.

In many cases, assets are being sold at throwaway prices,
destroying years of entrepreneurial effort.
AIFBF highlighted that coercive legal measures—ranging from multiple
recovery proceedings in DRT, NCLT, and civil/criminal courts to the
misuse of investigative agencies—are pushing borrowers into distress
rather than offering resolution. This cycle, the Federation warned, is not
only ruining individual lives but also weakening India’s economic stability.

Key Reforms Urged by AIFBF
• Rationalise lending rates to global benchmarks.
Provide borrowers six months’ relief before liquidation or asset
sale.
• Ensure independent appointment of IRPs/RPs by NCLT, not banks.
• Release collateral and guarantees up to ₹10 crores under CGTMSE.
• End the practice of forced cross-selling of insurance products by
banks.
• Grant borrowers voting rights in IBC proceedings.

“Borrowers are not asking for charity; they are asking for fairness. Unless
these issues are addressed, the dream of a USD 5 trillion economy will
remain just that—a dream,” Shri Dayananda said.
The Federation concluded with a call for borrower-centric policy reforms
that restore trust, protect livelihoods, and strengthen India’s economic
foundations.

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