Even as microfinance institutions are seeking withdrawal of the Andhra Pradesh Microfinance (Money-lending) Regulation Act, the State Government has further broadened its scope.
Acting on claims for exemption from the Act by some MFIs on the ground that it would only apply to women members of Self-Help Groups (SHGs), the Government, in a notification, said the provisions of the Act would also apply to loans extended to males in the households of SHG members.
“It has been brought to our notice that some leading MFIs are now resorting to lending to male members of SHG households to get way from the Act. Now, it cannot be done,” Mr R. Subrhamanyam, Principal Secretary, Rural Development, told
The Society for Elimination of Rural Poverty (SERP) had told the Government about MFIs lending to the male members to claim exemption.
“Irrespective of whether the loan is given to the woman member or any other member of the household, the provision of the Act applies without change to all such money-lending activities,” says the notification.
Even all advances and discounts, advance of money without interest, shall also be governed by the provisions of the Act. All the registering authorities in the districts were directed to enforce the new incorporations into the Act.
When contacted, a senior functionary of SKS Microfinance Ltd conceded that some small players in the industry were lending to men. “While we are following the rulebook, there are some other MFIs who are lending to males to get away from the Act,” he said.
Mr Alok Prasad, Chief Executive Officer, Micro Finance Institutions Network (MFIN), a registered body of 44 MFIs recognised by the Reserve Bank of India, said once an Act was in place, it was the ‘call' of the Government to add or delete any provision.
“Our hope and expectation is that the current duality of regulation (from the State Government and the RBI) would go and a common regulation for NBFC-MFIs and other NGOs, small players in the microfinance sector will come in the form of a Central Act,” he said.