Govt to bring Ordinance to check MFIs

The State Government will mostly likely promulgate an ordinance shortly to check the highhandedness of the Micro Finance Institutions.

Speaking to media persons on Wednesday, Rural Development Minister Vatti Vasanth Kumar said that the Cabinet will discuss the issue threadbare and arrive at a decision soon on the controversial issues as the people in the villages are reeling under the pressure of these MFI agents.

Since the MFI subject comes under the purview of RBI,at the moment legal consultations are going on.

The government is also scheduled to discuss the issue with state level bankers committee shortly.

“The government cannot shut its eyes. We will act,” Mr Vasanth Kumar assured.

Chief Minister K Rosiah, had also spoken to Prime Minister Manmohan Singh about the need to check the MFIs during his trip to New Delhi, the Minister informed.

 Further, the Chief Minister will also hold a video conference on Thursday with the district Collectors on the subject, the Minister revealed.

Asked about the urgency to act on the issue, he said, "this is a burning issue and the government is firm on action."

 Several suicide due to the inability of the debtors to pay the exorbitant interest charged by the MFIs, have come to the notice of the government, he revealed.

So far 25 persons have resorted to suicides. The abnormal interest component, at the rate of Rs 6, accrues to about 72 percent, the Minister said.

 Earlier, the Minister held a video conference here with various representatives of self-help groups and others across the State and elicited their opinions and heard their grievances.

When the self help group women complained to Minister that they were not receiving funds properly, Mr Vasanth Kumar expressed his anger over the Project Directors of Integrated Tribal Development Agency for their failure in meeting targets set for release of funds sanctioned for the purpose.

The SHGs stated that Rs 6 interest was charged on loans and provisions of insurance were imposing on them.

He assured them that the government was behind them for any eventuality and that they should not succumb to the pressure tactics employed by the MFIs.

If the PDs release adequate funds properly for self help group women members, they would not have approached Micro Finance Institutions seeking loans with high rate of interest, the Minister stated.

He directed the District collectors and police to file criminal cases against those Micro Finance Institutions if they resort to goondaism in recovery of loans.

Mr Vasanth Kumar directed the police to book criminal cases against such firms, which resort to violent methods to recover their loans from women and rural folk.