AP Government to act tough against erring MFIs

HYDERABAD: Andhra Pradesh Chief Minister K Rosaiah on Saturday directed the District Collectors to act tough against microfinance institutions (MFIs) that were fleecing poor borrowers, particularly in rural areas.

Addressing the Collectors through a video-conference from the Secretariat in Hyderabad, he said the government has brought in an ordinance that makes it mandatory for MFIs to register their activities with the specified authority (District Rural Development Agency) in each district.

Rosaiah pointed out that several persons had committed suicide in the recent days as they were unable to repay the loans borrowed from MFIs because of the usurious rate of interest and also harassment from the lenders.

"Hitherto there was no authority to rein in the MFIs that charged exorbitant rates of interest and adopted illegal means to recover dues from borrowers. Now that an ordinance has been promulgated with wide-ranging powers, the Collectors should be vigilant and take every legal step to keep a tab on MFIs," the chief minister said.

One way of keeping a check on MFIs was increasing institutional lending to the poor in rural areas, Rosaiah maintained.

The chief minister also asked the collectors to ensure that farmers got the minimum support price for paddy produced in the kharif season.