Licences of ''errant'' MFIs will be cancelled: Minister

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Hyderabad, Mar 10 (UNI) Andhra Pradesh Rural Development Minister G Chinna Reddy today assured the state Assembly that the government would ensure that licences of ''errant'' Micro Finance Institutions (MFIs) were cancelled by the Reserve Bank of India (RBI).

Replying to a question from CPI Floor Leader Ch Venkat Reddy and other CPI members, he promised to sympathetically consider the demand of ex-gratia for the families of the borrowers, who had ended their lives following forcible collections by some MFIs.

He informed the House that according to the report from Krishna District Collector, there were prima-facie evidences of suicides in respect of ten borrowers of MFIs.

The minister said MFIs had agreed to a high-level committee appointed by the state government that they would reduce all existing flat interest of 15 per cent to 15 per cent diminishing or 7.5 per cent flat, for all loans.

Under Total Financial Inclusion (TFI) package, 39,732 Self Help Groups (SHGs) had received Rs 1,257.49 crore to swap old and high cost loans taken from moneylenders and microfinance firms.

A sum of Rs 179.27 crore was disbursed to 4,71,659 SHGs as interest subsidy under the ''Pavala Vaddi'' scheme up to January 2008, he said.

Bank linkages to SHGs had been stepped up from 2,000 crore in 2005-06 to Rs 3,067 crore in 2006-07 and further to Rs 7,000 crore in 2007-08, he said, adding that quantum of finance to each SHG had been increased from Rs 60,000 to Rs two lakh on average during this year.

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