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MFI scandal: Cabinet meeting today

Special Correspondent

Draft of ordinance to be finalised for curbing unlawful activities

HYDERABAD: Alarmed at the spate of suicides by borrowers following harassment by microfinance institutions (MFIs), Chief Minister K. Rosaiah has convened a special Cabinet meeting on Thursday to finalise the draft of an ordinance to be promulgated to curb the unlawful activities. The Advocate General and other legal experts are being consulted in this respect.

He has directed district Collectors and Superintendents of Police to crack down hard on the MFIs found charging unreasonably high rates of interest and resorting to strong-arm methods to recover their loans.

Mr. Rosaiah held two meetings on Wednesday – one with the Minister for Rural Development V. Vasanth Kumar and Chief Secretary S.V. Prasad before leaving for Vijayawada and another with the State Level Bankers' Committee on his return as the Opposition parties were up in arms over the rash of suicides, mostly by women, who are being hounded by the MFIs. At several places, offices of the MFIs were attacked by workers of various political parties.

The Chief Minister reportedly gave vent to his anger on the bankers for not doing enough to come to the rescue of the rural poor and members of self-help groups in a big way.

Joint responsibility

He told them that it was the joint responsibility of the government and the banks to help the poor in distress. “You have to rise to the occasion. Now is the time for banks to come to the rescue of the rural poor.” The banks must also increase the ceiling on loans given to SHGs to prevent recourse to MFIs, he said.

Separately, Mr. Vasanth Kumar addressing district officials through video conference, asked them to disqualify members of the SHGs from posts in SHGs if found to be acting as agents of the MFIs. Mr. Rosaiah too will address Collectors and SPs through a video conference on Thursday.

Draft Bill

Mr. Rosaiah also wrote a letter to the Prime Minister requesting him to re-examine the draft Bill proposed to be introduced in Parliament to regulate MFIs.

He suggested measures by the RBI to restrict interest chargeable by the MFIs to 8 per cent and declare the use of coercive methods to recover loans a non-bailable offence.

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