Governor ESL Narasimhan gave his assent on Friday to the Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Bill, 2010, passed by the assembly on December 14 and Council the next day.
The legislation enacted by Andhra Pradesh to regulate microfinance institutions (MFIs) and protect the women self-help groups (SHGs) from exploitation came into force today.
Governor ESL Narasimhan gave his assent on Friday to the Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Bill, 2010, passed by the assembly on December 14 and Council the next day.
Accordingly, the government issued an order today notifying the coming into force of the Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Act, 2011.
Minister for women welfare V Sunita Laxma Reddy said in the assembly on December 14 that 75 women committed suicide in recent months in the state, unable to bear the coercive practices adopted by MFIs to recover loans.
"Not only are the MFIs charging usurious rates of interest on loans extended to women but also adopting strong arm tactics for recovery. The MFIs have been working only with the motive of making huge profits at the cost of the hapless poor," Sunita had said.
It was to end such practices that the government enacted the legislation, she had said.
The Act makes registration of MFIs with the respective Registering Authority in each district mandatory. MFIs also cannot seek any form of security in the form of pawn, pledge or other from a borrower nor charge any other amount except that prescribed in the rules. It also has a penal provision.
The government, in consultation with the high court, may set up fast-track court in each district for settlement of disputes of civil nature between the borrowers and MFIs.
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