AP to introduce microfinance bill | business | Hindustan Times
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AP to introduce microfinance bill

business Updated: Dec 08, 2010 22:39 IST
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The Andhra Pradesh Government is all set to introduce the microfinance bill, which seeks to curb the exploitation of rural borrowers by lending companies, on December 10 during the winter session of the State Assembly.

“The ordinance that was promulgated in October will be introduced as it is,” principal secretary, Panchayat Raj and rural development,
R Subrahmanyam said.

However, said there will not be any cap on the interest rates being charged by microfinance institutions (MFIs) in the bill.

“There will not be any modification in the bill. We are very firm on curbing the coercive methods in recoveries. We have prepared our report and that will be submitted to a RBI team that is scheduled to visit the state on December 15. We are making an elaborated submission,” Subrahmanyam said.

The microfinance bill makes registration for MFIs mandatory, with non-registration resulting in a three-year jail term or Rs one lakh fine.

MFIs must take prior approval from the registration authority to give loans to SHG members, who have already availed of bank finance.

Attempts to recover the loan through coercion will attract a three-year jail term or Rs one lakh fine or both, among other punishments.

Meanwhile, the Microfinance Institutes Network (MFIN) is likely to file a petition in Andhra Pradesh High Court seeking early disposition of their plea, seeking quashing of the ordinance against MFIs, MFIN Counsel Niroop Reddy said.