Seeking to rein in microfinance institutions (MFIs), whose coercive functioning led to alleged suicides by a number of poor and rural people, the Andhra Pradesh government on Thursday approved a special Ordinance for the purpose and sent it for the Governor’s assent.
The State Cabinet met here specially to approve the ordinance in view of the massive pubic outcry over the harassment of the poor by the MFIs. State Rural Development Minister V Vasanth Kumar, talking to reporters after the Cabinet meeting, declined to divulge the contents of the ordinance.
“I cannot reveal the contents of the ordinance before the Governor gives his assent. Wait for 24-48 hours,” he said.
Chief Minister K Rosaiah held a video conference with the District Collectors and Superintendents of Police (SPs) prior to the Cabinet meeting and directed them to act tough on erring MFIs to prevent any harassment of those who have taken loan from them.
Mr Rosaiah, who held meeting with state level bankers on Wednesday to discuss ways to help the poor loanees, told them to disburse loans expeditiously as per their targets. During the video conference, he told officials to hold district level bankers’ meetings to see that loans are given at reasonable rate of interest to the needy.
Many rural borrowers allegedly committed suicide in Andhra Pradesh during the last few months following their inability to pay back loans. Vasanth Kumar said the victims of MFIs would be provided a total Total Financial Inclusion (TFI) package under which a debt swapping module would be worked out. The debt swapping meant conversion of higher rate of interest on loans to a lower rate.
