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Andhra Pradesh Micro Finance Institutions (Regulation of Money lending) Act, 2010

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The Andhra Pradesh State Government passed the Andhra Pradesh Micro Finance Institutions (Regulation of Money lending) Act, 2010, to ensure that it has oversight on the sector.


  • The Government of Andhra Pradesh released the Ordinance in October 15, 2010.
  • The Ordinance stipulated conditions for the microfinance activities in the State.
  • This Ordinance was ratified two months later on December 15, 2010 by the lower house of the Andhra Pradesh assembly.

Key features of the Bill

  • All MFIs should be registered with the district authority.
  • No person should be a member of more than one SHG.
  • All MFIs shall make public the rate of interest charged by them on the loans extended.
  • There would be a penalty on the use of coercive action by the MFIs.
  • Any person who contravenes any provision of the Ordinance shall be punishable with imprisonment for a period of 6 months or a fine up to the amount of Rs 10,000, or both.
  • The State Assembly accepted most of the features from the earlier Ordinance in the Bill. However, the demand for a cap on the interest rates charged by the MFIs for the loans extended to the SHGs was rejected during the ratification.
  • In 2011, SKS Microfinance challenged the Government in the Supreme Court of India that micro finance sector falls under the central list and is not a state subject on which the Andhra Pradesh government could pass any act.