SKS Microfin gets SC relief, nod to resume ops in Andhra

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Mar 19 2013, 08:28am hrs
In a big relief to microlender SKS Microfinance, the Supreme Court on Monday allowed it to resume operations in Andhra Pradesh.

A Bench headed by Justice TS Thakur in an interim order allowed the microfinance institution to resume operations after its senior counsel Harish Salve argued that the firm is complying with all the directions issued by RBI. The court issued notice to Andhra Pradesh government and others after ordering that no coercive steps should be taken against SKS if it complied with all orders.

SKS had challenged the Andhra Pradesh High Courts February judgment that dismissed its plea against the Andhra Pradesh Microfinance Act, 2010, which had barred micro finance firms in the state from doing business at the customers doorstep and made government approval mandatory for every second loan to a borrower so as to protect the interests of the poor. However, the HC had asked the state to review the law in the context of national legislation - Micro Finance Institutions (Development and Regulation) Bill 2012, proposed to cover the segment.

Challenging the HC judgment that held the state government may examine whether the impugned Act was required in the wake of comprehensive 2012 Bill in the Lok Sabha, SKS said that the impugned state Act clearly interfered with its right to carry on business and is contrary to public interest because it seeks to abolish in practical terms the micro finance business.