MFIs caught between RBI and Govt norms

Microfinance Institutions MFIs in Andhra Pradesh are in a state of confusion as some of the recommendations made by the Reserve Bank of India RBI for the sector are contradicting the rules prescribed by the State Government in its Microfinance Act.

Andhra Pradesh accounts for almost 25 per cent of the Rs 30,000-crore microfinance trade in the country. As many as 24 of the total 44 MFIs recognised by the RBI are operating in the State.

The central bank,while accepting the Malegam Committee report,recently suggested that the repayment schedule weekly or monthly of loan can be chosen by the borrower.

However,the AP Micro Finance Institutions Regulation of Money Lending Act,2011 clearly says that the repayment cycle should not be less than a month.