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