The Assam Assembly on Wednesday passed the Assam Micro Finance Institutions (Regulation of Money Lending) Bill, 2020 which aims to “protect and relieve the economically vulnerable groups and individuals from the undue hardship of usurious interest rates and coercive means of recovery” by microfinance companies.
Speaking in the Assembly on Wednesday, state finance minister Himanta Biswa Sarma stressed on the provision of the Bill that says that no microfinance institution shall “deploy any agents for recovery nor shall use any other coercive action either by itself or by its agents for recovery of money from the borrower”.
Said Sarma, “These agents exploit women. They are taking undue advantage of these women. In the last five years, of all the laws that we have passed, this Bill is the best piece of legislation and we are dedicating it to the women of Assam.”
The Bill says that lenders shall ensure that the borrower has existing loans from not more than two lenders and his current cumulative loan outstanding does not exceed Rs 1.25 lakh.
The Bill says that all microfinance institutions in the state shall apply for registration within 30 days from date of commencement of this Act, and no loans or recovery of any loans will be made without this registration. After verification, the Registering Authority will provide registration for two years.
The Bill says no microfinance institution shall seek any security from a borrower “by way of pawn, pledge or other security for the loan”. The Bill also lays out provisions of penalty for coercive action by these companies or agents for recovery of money.
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