Cabinet okays draft Ordinance on MFIs

Updated at:
Cabinet okays draft Ordinance on MFIs
Cabinet okays draft Ordinance on MFIs

The State Cabinet on Thursday unanimously agreed on the proposal to bring in an Ordinance to check the anti-people functioning of the Micro Finance Institutions, which had been playing havoc with the lives of the poor people in the rural areas.

Talking to media persons at the Secretariat, Minister for Rural Development Vatti Vasantha Kumar, accompanied by I&PR Minister Geetha Reddy, stated that the government will now send the draft Ordinance (Micro Finance and Money Lenders' Regulatory Act 2010) to the State Governor ESL Narasimhan for his assent.


 Asked to divulge the details in respect of the ordinance under reference, the Minister said that he would not be in a position to detail the press on this subject. "Wait for 24 hours for assent of the Governor and for more details", he said.

 Mr Vasanth Kumar however informed that the existing loans availed by the SHGs members from MFIs will be swapped. Debt Swapping is conversion of loans to subsidize interest rate from the existing interest rate

The Cabinet also discussed the need to identify the victims of MFIs and the Revenue Division Officials will be directed to monitor the situation closely and find out whether excess interest was charged and collected from the innocent loanees, who were approaching them because of urgency.

The Revenue authorities were also directed to check whether the MFI units are registered or not and in case the institutions are defaulters a fine of Rs 3 lakhs or three years in jail should be imposed.

The Minister informed that in the State Assembly meeting held in July, a Money Lenders Act was raised and that proposal was sent to New Delhi for approval as the interest charged by the RBI was a Central subject.

Parliament's nod and then the President's assent was awaited, Mr Vasantha Kumar informed.

Some Ministers are understood to have raised the issue of interest rate, which was turned down on the plea that it was not a State subject.

The Cabinet is also understood to have discussed the pending issue of government staff, and the State government's plea for centre's cooperation for enhancing the godowns capacity among others.

 Further, the Opposition raking up the issue emanating from the MFIs only to put the government in a predicament also came up for discussion and it was brushed aside stating that it was not a new beginning. 

Earlier, Chief Minister K Rosaiah held a video conference with the district Collectors and SPs.

The Chief Minister expressed his seriousness on the subject by directing them to remain vigilant and take stringent action against those harassing the loanees for recovery of loans and take steps to stop suicides.

The Collectors were told convene District Level Bankers' meet and persuade their branches to effect more loans on priority as the poor people needed money.

Mr Rosaiah also made it clear to them to take into account the Debt Swapping package offered in Sircilla for 100 percent recovery of loans of SHGs members as a role model to prevent suicides.