Govt blames Babu for MFIs rot

The State Government on Friday put the blame squarely on the shoulders of the Leader of Opposition N Chandrababu Naidu for the mushrooming and strong arm tactics of MFIs.

According to Andhra Pradesh Micro Finance Institutions (regulation of money lending) Ordinance, 2010 states that the major Micro Financing players like SKS, Spandana, Share etc started operationalising their activities during TDP regime.

The State Government says that it is not able to comprehend whether leader of opposition is in favour of or against MFIs as his demand for Government to take action for waiving MFI loans would only further strengthen and promote the MFIs.

The government furthers stated through the Ordinance that  “All free and loan Mafee” slogans raised by the TDP president had lured SHGs to defer repayment which is evident from reduced recovery rate in SHG-Bank Linkage port folio resulting in making many SHGs ineligible for Pavalavaddi entitlement.

Apart from this, defaulting of loans by SHGs held back bankers from releasing further loans to SHGs liberally forcing them to approach MFIs for credit support.

The government claims that it disbursed Rs 27,399 crore from 2004-05 to date as SHG-Bank linkages as against the 1,899 crore up to 2003-04.

It further claimed to have released Pavalavaddi to a tune of Rs 834.25 crore till date and a new system of releasing of Pavalavaddi online directly from central Account to SHG saving Bank Account is introduced in the current year.