SKS Microfinance is expected to file a revised petition in the Andhra Pradesh High Court this week challenging the Microfinance Act enforced by the state government.
?SKS, Microfinance Institutions Network and Spandhana will have to file a revised petition. This is because the ordinance has now been cleared by the state legislative and is an Act,?? said a source in the know of the development.
Meanwhile, MFIs have met with the Reserve Bank of India (RBI) appointed YH Malegam committee, which is studying issues and concerns relating to the micro finance sector. The Malegam committee members, which met the MFIs and the AP government on December 15 and 16 attempted to understand the cost structure and lending practices of MFIs.
?We have suggested that for prudential norms like capital adequacy norms and interest rates, the sector could be regulated by RBI. For functional aspects, supervision could be done by the central government, ensuring a single national regulation,?? said a senior MFI official.
He added, ?Perhaps Nabard could be the functional regulator for the sector as it has the required bandwidth.??
Lending by MFIs in Andhra Pradesh has assumed a political hue after alleged reports of farmer suicides driven by coercive loan collection methods. The AP government passed a Microfinance Bill in mid-December, which has bought the entire sector to a standstill in the state.
?The act which has mandated a monthly loan collection system as against the earlier weekly model has affected collections. The loan recovery in the State continues to be low at 20%,?? said a CEO of a microfinance institution.
?It would be ideal if we could let the borrower choose if he prefers a weekly or a monthly repayment cycle,?? he added.