Ranchi: The government is seriously considering introduction of plastic currency notes in the country to check the menace of fake notes, reports PTI quoting Reserve Bank of India (RBI) governor D Subbarao.
“We are seriously considering introducing plastic currency notes in the Indian economy to check the fake currency problem and also for their longevity,” Mr Subbarao said while interacting with students of Ranchi University.
“We will also take into consideration the experience of countries like Australia and New Zealand who have been using plastic notes,” he said.
The problem of fake currency notes being circulated has been affecting the economy and the RBI was taking steps to check it, he said.
The RBI, Mr Subbarao added, was consulting other banks of the country and the Centre on the ways to check the problem.
When a student pointed out that fake currency notes were being distributed even through bank ATMs, he said the RBI was preparing stringent standards in this regard and very soon they would be implemented.
Mr Subbarao said the RBI was focusing on inclusion of the rural economy into the banking system as it was imperative for faster growth of the country's economy.
“RBI is organising several outreach programmes in association with other banks to reach the rural population and the objective is to provide core banking facilities in all the panchayats of the country,” Mr Subbarao said in reply to another query by a student.
The Indian economy, he added, was fast growing and with the inclusion of rural population, it would even surpass Chinese economy.
Mr Subbarao, who is on a two-day trip to the state to popularise rural banking, attended a high-level meeting where Jharkhand Chief Minister Arjun Munda, chief secretary A K Singh and other senior officials were also present.
Hyderabad: The Andhra Pradesh assembly on Tuesday night passed a Bill seeking to protect women self-help groups from “exploitation” by microfinance institutions (MFIs), which have come under scrutiny for alleged strong-arm tactics in debt collection and steep interest rates, reports PTI.
The Micro Finance Institutions (Regulation of Money Lending) Bill, 2010, which will be placed in the state Legislative Council on Wednesday, seeks to replace the Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) ordinance promulgated by state government on 15th October in the aftermath of 75 suicides by microfinance borrowers in various districts in recent months.
The state government rejected the opposition demand that the Bill be referred to a joint select committee of the legislature to study the various provisions in detail and make it foolproof.
Also, the government rejected the demand for putting a cap on the rate of interest charged by MFIs saying the subject was under the purview of the Centre.
The Bill, which was moved in the assembly on Saturday, was taken up for discussion last night after the principal opposition Telugu Desam Party (TDP) MLAs were suspended from the House and Left parties and the MIM legislators staged a walkout.
The TDP wrote a letter to deputy speaker Nadendla Manohar earlier in the day requesting that the Bill be referred to a select committee as it served no purpose without a cap on the rate of interest.
Praja Rajyam Party MLA Vanga Geeta, BJP floor leader G Kishan Reddy and Lok Satta legislator N Jayaprakash Narayan appealed to the government not to approve the Bill in haste and instead refer it to a joint select committee of the legislature.
Earlier, minister for women welfare V Sunita Laxma Reddy said 75 women have so far committed suicide in different districts of the state in recent months, unable to bear the “coercive” practices adopted by MFIs to recover loans.
“Not only are the MFIs charging usurious rates of interest on loans extended to women but also adopting strong arm tactics for recovery. The MFIs have been working only with the motive of making huge profits at the cost of the hapless poor,” Ms Sunita said.
It was to end such practices that the government promulgated the ordinance to regulate MFIs’ activities, she said.
Lok Satta Party leader Jayaprakash Narayan said the state government should place a cap on the rate of interest while enacting the law on MFIs.
“The state should treat MFIs as mere money-lenders and place a cap on the interest rate in due consultation with Reserve Bank of India,” he said.
The growth of MFIs was only because of the collapse of co-operative credit system. “Wherever the co-operatives are strong, there is no MFI menace. MFIs have realised that there is profit to be made out of poverty and thus flourishing. It is also due to failure of the government,” he added.
Mr Narayan, however, cautioned that the “Kabuliwallah” system could resurface if MFIs were forced to shut shop totally.
The Bill passed in the assembly contains no changes despite a demand raised by Microfinance Institutions' Network (MFIN) for certain amendments.
The state government pointed out that MFIs were using women self-help groups to expand their business by giving loans at usurious rates of interest, which in some cases extended up to 54%, without verifying their capacity to repay.
The MFIs were also using coercive methods with the help of recovery agents to recover the loans from the borrowers, it said.
“This has resulted in many cases of suicide of rural and urban poor and molestation of the borrower or the family members,” the government said in the statement of objects and reasons of the Bill.
The Bill makes registration of all MFIs with the respective registering authority in each district mandatory.
The MFIs also cannot seek any form of security in the form of pawn, pledge or other from a borrower nor charge any other amount except that prescribed in the rules.
The state government, in consultation with the high court, may establish a fast-track court in each district for settlement of disputes of civil nature between the borrowers and the MFI in respect of the loans granted.
The Bill also has a penal provision wherein any person who contravenes the law shall be punishable with imprisonment for a period of six months or fine extending up to Rs10,000 or both.
MFIN, however, contends that many microfinance institutions registered with the Reserve Bank of India will find it difficult to operate their business in Andhra Pradesh because of the stringent provisions in the legislation.
A writ petition filed by MFIN against the ordinance is currently pending before the state high court.
Nation states have become investors. It is State capitalism with a difference