HYDERABAD: After being shunned away by the united AP government following alleged suicide by borrowers in 2010, unauthorised micro finance institutions (MFIs) are once again making inroads into the state rural economy.
Though the issue has not reached alarming proportions yet, isolated cases of uncertified agencies lending at exorbitant interest rates to borrowers have been reported from Ranga Reddy, Medak and Nizamabad districts so far.
Confirming the same, Stree Nidhi Telangana Credit Cooperative Federation managing director G Vidyasagar Rao said: “Yes, we have received cases from districts but it is not rampant. Even then, we have instructed District Rural Development Agency officials to send in reports on such agencies. Basing on the reports, we will certainly slap cases on such agencies.”
Stree Nidhi Credit Cooperative Federation was set up to attend to credit needs of the rural folk following the void left by micro finance agencies.
In December 2010 the then Congress government had enacted the Andhra Pradesh Microfinance Institutions (Regulation of Moneylending) Act, 2010 virtually placing a blanket ban on the operations of those financial institutions.
The legislation was brought amidst reports that 54 borrowers had allegedly committed suicide having been unable to pay off loans taken from MFIs at usurious rates.
Weak monsoon, coupled with lack of availability of institutional credit, is said to be driving borrowers, mostly farmers, to seek loans from MFIs.
Meanwhile, the state government has conveyed its objections to the Centre’s proposed Micro Financial Sector Development and Regulation Bill. With certain regulations, the bill is expected to give boost to the MFIs in the country.
If passed, the bill will supercede the state government’s Act of 2010. Hence the objections, the official explained.
The bill, drafted in 2010, has been pending for Parliament’s approval for the past five years.