New Delhi: The government today said it is not mulling a regulator for microfinance institutions (MFIs), but wanted them to evolve a code for themselves, even as these lenders draw criticism over their exorbitant interest rates and coercive recovery methods, reports PTI.
At the Economic Editors' Conference here, finance minister Pranab Mukherjee said he has suggested to the Andhra Pradesh government to address some stringent provisions in its recently promulgated ordinance to rein in MFIs.
"I am not currently thinking of appointing any regulator right now... As we expect there should be a code evolved by the institutions themselves where rates of interest are not abnormally high and there should not be a coercive mechanism to recover the money," Mr Mukherjee said.
There have been speculations that the National Bank for Agriculture and Rural Development (NABARD) could be appointed as regulator for MFIs, as they do not come under separate regulation as of now.
Industry chamber Associated Chambers of Commerce and Industry (Assocham) has asked the government to set up an effective regulating body and put a cap on the interest rates charged by MFIs.
"The confidence of the people in microfinance model of development has shaken by the practices of unscrupulous microfinance institutions functioning in the rural areas of the country," Assocham said.
The Andhra Pradesh government recently promulgated an ordinance to check MFIs, after a number of suicides were reported in the state, allegedly due to strong-arm tactics of MFIs for recovery of loans.
The ordinance makes it mandatory for all MFIs in Andhra Pradesh to register with the district registering authority, the project director (PD) of the District Rural Development Agency (DRDA) for rural areas and PD of MEMPA for urban areas.
Now, MFIs will have to specify the area and system of their operations, the rate of interest and recovery mechanism while registering with the registering authority.
The registering authority may at any time either suo moto or upon receipt of complaints by Self-Help Groups (SHGs) or the general public can cancel the registration of the MFI after assigning sufficient reasons.
The finance minister said, "In respect of the ordinance which the Andhra Pradesh government has issued...I had a talk with the chief minister over the phone and suggested certain corrections in the ordinance...to see that the harsh provisions are taken care of."
He said MFIs should ensure that the borrower is in a position to pay back the money and as such lending should be mainly directed towards the productive borrowing not so much towards consumption.
The RBI has also constituted a sub-committee to look into the functioning of MFIs.
New Delhi: The Supreme Court today cancelled the bail granted to Satyam Computer Services founder B Ramalinga Raju, his brother B Rama Raju and four others, by the Andhra Pradesh High Court, in the biggest corporate fraud case in the country. Hearing the plea of the Central Bureau of Investigation (CBI), a Supreme Court bench of Justice Dalveer Bhandari and Justice Deepak Verma cancelled the bail and asked all the six persons to surrender by 8th November.
The judges observed that the case was the biggest scam in the history of the country and had affected a large number of shareholders, banks and financial institutions; therefore, the High Court order granting bail could not be sustained. The Court also directed the Special Court in Hyderabad, which is conducting the Satyam trial, to conclude its proceedings by July 2011. Earlier this month, the bench had issued a notice to Raju, directing him to file his reply on the CBI’s plea.
Raju was granted bail by the High Court on 18th August this year. He had been in custody since January 2009 when he wrote a letter to the board explaining financial irregularities. The admission that he had overstated company assets by more than $1 billion, triggered a stock slump and a government takeover that led to the sale of the Hyderabad-based software-services exporter to Tech Mahindra.
Today, the Supreme Court observed that the trial was pending in a Special Court and detailed reasons for granting bail were not given by the High Court. “Normally, the apex court does not interfere in such cases where bail has been granted by the High Court, but the facts of the case demand that we should interfere,” the judges said.
In its petition for cancellation of the bail, the CBI said that Satyam’s founder and former chief “misused” the bail by meeting one of the witnesses in the case and tried to “influence” him. The CBI has filed a chargesheet running into over 10,000 pages, naming more than 250 witnesses. Such a huge volume was criticised by the court in its hearing on 19th October.
The High Court had granted bail to the Raju brothers as well as to four employees of Satyam—Srinivas, Ramakrishna, Venkatapathi and Srisailam. The CBI had approached the Supreme Court on 13th September, saying that Raju might influence the witnesses, a majority of who were his former employees. The High Court allowed Raju bail on the grounds that all the other accused in the case had already been granted bail.
Raju, who was arrested on 9th January 2009, is undergoing treatment for a liver infection at the state-run Nizam Institute of Medical Sciences. The Supreme Court ordered that he should appear before the trial court after he is discharged. The Special Court was set up by the Andhra Pradesh government in November 2009 and a judge was appointed on 25th February this year.
New Delhi: Telecom minister A Raja today said mobile number portability (MNP), which allows subscribers to retain numbers even after changing service operators, will be kicked off from 1st November, starting with Haryana, reports PTI.
"1st November onwards MNP would be operational partially...
We wanted to inaugurate in Haryana," Mr Raja told reporters here.
The service is expected to be rolled out in the rest of the country in phases.
Its implementation is already delayed thrice due to different reasons. Necessary infrastructure not being in place was one of the reasons for delay.
The Department of Telecom (DoT) had given licences to Syniverse Technologies and MNP Interconnection Telecom Solutions, a 74:26 joint venture between US-based Telcordia and Deepak Talwar Consultants Pvt Ltd to implement MNP.