HC allows microfinance cos. to carry out activities in AP

In a relief to microfinance companies which had to stop their activities due to the new ordinance brought out by the Andhra Pradesh Government, the High Court in Hyderabad in an interim today allowed microfinance companies to carry out their activities in the state.

In a relief to microfinance companies which had to stop their activities due to the new ordinance brought out by the Andhra Pradesh Government, the High Court in Hyderabad in an interim on Friday allowed microfinance companies to carry out their activities in the state.

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The court also directed MFIs to register their activities within a week with the government as mandated by an ordinance issued by it last week.

A division bench comprising Chief Justice Nisar Ahmad Kakru and Justice Vilas V Afzalpurka said that the companies can carry out their day-to-day activities and the government can book cases if they violate Section 9 and 16 of the Andhra Pradesh Microfinance Institutions Ordinance-2010.

Section 16 says all persons who are connected with and responsible for the day-to-day control, business and management of a MFI including the Partners, Directors and the employees, who resort to any type of coercive measures against the SHGs or its members of their family members shall be liable for punishment of imprisonment which may extend up to a period of three years or with fine which may extend to one lakh rupees or with both.

Section 9 says no MFI shall recover from the borrower towards interest in respect of any loans advanced by it, whether before or after commencement of this Ordinance, an amounting excess of the principal amount.