A day after SKS Microfinance's warning that it might pull out of Andhra Pradesh, the state government said it would not make any changes in the contentious Micro Finance Institutions (Regulation of Money Lending) Act.
“SKS is a for-profit company. It is free to have its operations wherever it likes. But in Andhra Pradesh (AP), it should comply with the prevailing laws,'' a senior official of the rural development department told Business Standard. SKS chairman Vikram Akula had yesterday said it might consider pulling out of AP if the state government did not revoke or reform the Act by April 1.
“The companies should see the intent with which it was brought — safeguarding the interests of poor households,'' said the official. He said the state government had made this point to the Malegam committee appointed by the Reserve Bank on the issue.
“There are a number of instances where SKS has given loans to self-help groups without meeting the specified purpose,” the official said.
The government also said it would be living in a make-believe world if it assumed that MFIs would be able to self-regulate. “We want the Reserve Bank of India to take a holistic view of the issue. The government is not interested in regulating the microfinance sector but at the same time will not allow the MFIs to exploit the poor.”
