A Division Bench of the Supreme Court issued notice to the state government directing it to file a reply on regulation of Microfinance Institutions in the state after allegations that their high interest rates and strong-arm recovery methods led to suicides by farmers.
Justices Markandey Katju and Gyansudha Mishra issued notice to the state government on a petition filed by SKS Microfinance challenging the Special Act passed by the state government to regulate Microfinance Institutions in the state.
The Apex Court, while issuing notices to the state government, directed it to file a reply and posted the matter for hearing in the third week of July.
Appearing on behalf of SKS Microfinance, senior counsel Fali S Nariman stated that the state government has no power to regulate the microfinance sector.
According to the petitioner, microfinance sector falls under the Central list and is not a state subject on which the Andhra Pradesh government could pass any act.
The state government passed the Andhra Pradesh Microfinance Institutions (Regulation of Money lending) Act, 2010, to ensure that it has control on the sector.