Collector orders probe into MFIs’ operations

D. Chandra Bhaskar Rao

KHAMMAM: A through probe has been ordered by District Collector V. Usha Rani into the operations of the micro finance institutions in Khammam following allegations that they were charging high interest rates and indulging in unethical loaning and recovery practices.

Prompted by the suicide of a couple at Tallamada village in Sathupalli mandal allegedly on account of the pressure recovery agency of a micro finance company, she sought to address the Reserve Bank of India on the steps needed to regulate the functioning of the MFIs without affecting the credit flow for the needy sections.

Finding it difficult to repay the loans availed from three MFIs, N. Prasad and his wife Lakshmi consumed poison and died in a suicide pact in Tallamada village on Tuesday.

Prasad, ailing for quite sometime had been out of work for over a fortnight. One of the finance companies had for the past few days been exerting pressure on the couple for repayment.

The District Collector said that the family had borrowed to the tune of Rs 60,000 from three institutions and the couple had been under pressure for repayment. The tehsildar concerned was asked to enquire into the circumstances under which the couple committed suicide. He was also asked to find out whether they had the RBI permission for lending.

Not authorised

She said that the MFIs were not authorised to collect or more than 12 per cent interest and the credit should help generate some sort of income for the family or individual concerned. It was observed that some families had been borrowing loans from more than one institution over and above their repaying capacity and thus landing in trouble.

In the meantime, the Sathupalli sub-inspector, S.P. Ravinder probing the suicide of the couple, said there was no default so far as the repayment of the MFI instalments was concerned. There is no direct evidence to attribute the suicides to the MFIs either, he said. There is no complaint against the NFIs even from other villagers who had availed of the loans, he explained.

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