He was reacting to allegations from the opposition parties that the state government was not cracking down effectively on errant MFIs due to Rahul's proximity to non-banking finance institutes. About 40 people, who are claimed to have taken loans from MFIs committed suicide following alleged harassment from lenders for repayment.
We have taken up the issue very seriously. I personally spoke to Prime Minister Manmohan Singh, Reserve Bank of India governor Subba Rao and wrote to Union finance minister Pranab Mukherjee seeking their intervention. I may meet Pranab personally in a week to discuss the MFIs issue further, Rosaiah added.
On Wednesday, the Andhra Pradesh High Court has posted the hearing of the petition filed by MFIN, SKS, Spandana and 15-odd borrowers, to October 22. The petition was filed against the state's microfinance ordinance, stating it as illegal and unconstitutional.
According to P Niroop Reddy, the legal counsel who argued for the petitioners, the micro finance companies were not able carry out their daily business because of the ordinance. The new ordinance prohibits the micro finance companies from extending or recovering loans without registration with the district administration. The ordinance that came into force on October 15 is aimed at regulating MFIs which have come under criticism for charging exorbitant interest rates causing over 30 suicides in the state.
The advocate general, who represented the case of the state, has sought time till Friday. He said these companies indulged in coercive methods of recovery and so far the state had registered 57 cases of suicides. He also said the MFIs did not follow the Grameen Model established by Muhhamad Yunus of Bangladesh.