The Micro Finance Institutions Network (MFIN) has demanded amendments to the Andhra Pradesh Micro Finance Ordinance to be tabled in the state assembly during the winter session starting Friday. MFIN president,Vijay Mahajan said,MFIN welcomes regulation of the micro finance sector as many rogue entities have started lending,giving MFIs a bad name. However,the current ordinance is not ideal because some provisions make it impossible for legitimate RBI-registered MFIs. With some modifications,the bill will enable RBI-registered MFIs to continue to provide access to finance to poor and low-income households. If those modifications are not made,there would be major repercussions not only for access to finance but also for the banking system. Mahajan said that MFIs have already taken some action following the crisis in the state. MFIs have registered with the authorities in all districts and complied with all provisions of Ordinance,including monthly collection at panchayat offices. They have reduced interest rates to 24 per cent diminishing balance per annum,made life insurance optional for borrowers,uploaded credit data of 90 lakh out of 97 lakh borrowers in two RBI licenced credit bureaus,held a number of meetings with the government of Andhra Pradesh to restructure loans for highly indebted households with loans of more than Rs 50,000. They have commissioned a study on over-indebtedness and alleged suicides,by Hyderabad Central University,conducted training programmes for staff to reaffirm that no coercive practices are used for loan collections, Mahajan said. MFIN says that the proposed bill offers many challenges. All MFIs have filed registration applications as required by the Ordinance. But the registration requirements are very detailed,such as requiring MFIs to give new ration card numbers and SHG names for their 97 lakh members. As a result,all MFI registrations are conditional. Secondly,MFIs are not able to disburse loans. Section 10 of the Ordinance requires MFIs to obtain prior approval from the DRDA before giving a loan to any SHG member. There is no time limit given on DRDA to give the approval. As 109 lakh women are SHG members,it means MFIs cannot give any new loans. Third,the Ordinance placed severe restrictions on collections dictating when,where and who can collect. Section 21,rule 20 (a) states that the repayment of the loan should be monthly or longer. Lakhs of poor borrowers have repaid MFIs on a weekly basis for years because they earn wages or a daily or weekly basis. Yet law does not permit that. Section 11 (6) specifies that repayment can be collected only at the Panchayat office. However,many borrowers live over 10-12 kms away from Panchayat officer and it is inconvenient for them. Repayment should be permitted at any public place, chief executive officer of MFIN Alok Prasad says. The AP government should address these issues and made necessary amendments before the Ordinance is tabled,Prasad said.