New Delhi, Aug. 10 -- Koderma, Jharkhand: In Dhora Kola village in Jharkhand's Koderma district, life is inching back to normal for an 18-year-old teenager, her siblings, and father. Sometimes neighbours come in and ask about her mother's whereabouts.

Eight years ago, the teenager's mother fled the village after taking loans worth over Rs.16 lakh from microfinance institutions (MFIs) and traditional money lenders in the name of another woman in the village.

This is a common practice in the village. For instance, if person A is in desperate need of funds, she convinces B, a neighbour or friend, to borrow money. A does this because she already is juggling multiple debts and is unable to repay them. The loan comes to B once her documents a...