Law to rein in micro-finance bodies’ bullying
With the rise in suicides in Andhra Pradesh following harassment at the hands of micro-finance institutions (MFIs), the state is now planning a legislation to control the lending rates and curb the often abusive approach used by MFIs during recollection.delhi Updated: Oct 11, 2010 23:39 IST
With the rise in suicides in Andhra Pradesh following harassment at the hands of micro-finance institutions (MFIs), the state is now planning a legislation to control the lending rates and curb the often abusive approach used by MFIs during recollection.
In the last few days, on an average 2 to 3 suicides — most of them by women — have been reported, a result of harassment they face from MFIs.
“The government cannot be a mute spectator (to these atrocities). We are moving fast to bring in legislation, a draft of which is ready, to reign in these institutions. It can be an ordinance (for the time),” R. Subramanyam, principal secretary, rural development, Andhra government told HT.
Task Forces formed at district level four months back to probe such atrocities failed to show desired results. Four years back, the government had clamped down scores of MFI operators, but to no affect.
There were around 24 deaths in last few months, officials say. Andhra with 300 odd MFIs constitutes 40 per cent of micro-finance sector in the country.
Though there are legislations like the Money Lenders (regulation) Act, to check traditional moneylenders, non-banking financial institutions like MFIs are not governed by any particular legal structure.
“The basic design of MFIs is to trust money into hands of unsuspecting people ... They indulge in very inhumane recovery hitting at the self respect of the villagers (prompting some to suicide),” CEO of Society for Elimination of Rural Poverty B.Rajasekhar said.
“The comprehensive legislation while protecting interests of self-help groups women, will also regulate MFIs who are moneylenders in new incarnation. ...the bill describes punitive measures for harassing or molestation of women in name of recovery,” J. Murali, regional project director, in-charge of micro finance, SERP said.