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At a time when an MP is in police custody over his involvement in a chit fund scam, the Centre’s efforts to regulate money lending by non-government institutes, especially in the rural areas, has run into rough weather.
A proposed legislation to control micro-finance bodies, which is the backbone of rural money-lending, was opposed by many quarters, including the Congress-ruled Andhra Pradesh government, at a meeting of the parliamentary standing committee on finance. Even finance ministry officials, who had come to defend the bill, reportedly said they may now have to review the legislation.
The legislation aims at putting a cap on interest rates, introducing a flexible recovery procedure and regulating the sector.
While several MPs like BJD’s Bhartrujari Mahtab and CPI’s Gurudas Dasgupta said there were loopholes in the bill, Andhra’s additional chief secretary was in favour of scrapping it altogether.
The Reserve Bank of India has already said it cannot act as the regulator in micro finance industry.
A bill on the same issue had lapsed during the previous Lok Sabha and the second legislation too faces a grim future.