SKS moves SC against AP govt’s microfinance Act

According to SKS, the microfinance sector falls under the central list and is not a state subject on which the Andhra Pradesh government could pass any act. It further submitted that the state can regulate only the money lending sector and not NBFCs, which are registered by the RBI

New Delhi: SKS Microfinance on Thursday challenged in the Supreme Court the special act passed by the Andhra Pradesh government to regulate microfinance institutions in the state after allegations that their high interest rates and strong-arm recovery methods led to suicides by farmers, reports PTI.

A bench of justices Markandey Katju and Gyan Sudha Mishra issued notice to the state government, directing it to file reply and posted the matter for hearing in the third week of July.

Senior advocate Fali S Nariman, appearing for SKS-the country's largest and only listed microfinance company-submitted that the state government has no power to regulate the sector.

The state government passed the Andhra Pradesh Micro Finance Institutions (Regulation of Money lending) Act, 2010, to ensure that it has oversight on the sector.

According to the petitioner, the microfinance sector falls under the central list and is not a state subject on which the Andhra Pradesh government could pass any act.

SKS further submitted that the state government can regulate only the money lending sector and not the non banking finance companies (NBFCs), which are registered by the banking sector regulator Reserve Bank of India (RBI).

The company also cited some recent studies on the microfinance sector and contended that it was a central subject.

The Act empowers the state government to take action against microfinance companies, if they violate provisions mentioned in the sections 9 and 16 of the Act.

SKS has requested the Supreme Court to immediately quash section 10 of the Act, so that it can continue its operations in the state.

Section 10 bars microfinance institutions (MFIs) from giving loans to any SHGs (self-help groups) or its members if they already have an outstanding loan from a bank.

They are also opposing another mandatory provision under the Act, which directs them to get registered in every district, along with the details of SHGs.

In such cases, MFIs will have to take prior approval from a special authority constituted under the Act by making an application.

It further states that only if the authority is satisfied that SHGs have understood the conditions of the loan and terms of repayment, and is beneficial for their family, it will give the nod.

It also says that no MFI would grant loan to SHG during the subsistence of two previous loans, irrespective of the source of the previous two loans.

Section 9 of the Act bars microfinance companies from charging interest in excess of the principal amount, irrespective of the fact whether the loan was given out before or after commencement of the Act.

Section 16 says that persons responsible for day-to-day control, business and management of such institutions will be liable for punishment of imprisonment for up to three years, if the firm took any coercive measures against SHGs or the members of their family.

This applied on all employees of such institution including partners and their directors.

Earlier, SKS had moved the Andhra Pradesh High Court, but failed to get any interim relief over the sections 10, and the matter is still pending there.

Following the failure to elicit any response from the high court, the firm moved the Supreme Court yesterday.




6 years ago

Going to court is not new its chairman.

AIADMK running ahead in TN; TMC sweeping Bengal; neck and neck in Kerala; Cong on top in Assam, Puducherry

According to early trends, the AIADMK looked like knocking out the ruling DMK in Tamil Nadu, as the Trinamool Congress appeared set to sweep away  the Left Front in West Bengal. The Congress-led United Democratic Front has the edge over the Left in Kerala

The favourites took sharp leads in the counting of votes taken up this morning for five states that went to the polls in the past month, according to early trends available.

In West Bengal, Mamata Banerjee’s Trinamool Congress (TMC) looked like sweeping the ruling CPI(M)-led Left Front out of power after 34 years, with a lead in three-fourths of the constituencies for which trends were available at 10am. The TMC-Congress alliance was ahead in 180 of the nearly 250 constituencies. West Bengal has a 294-member legislative assembly. TMC had only 31 members in the previous house and the Congress just 20, compared to the CPI(M)’s 176.

In Tamil Nadu, the other state that was tipped to see a change of government, J Jayalalitha’s All India Anna Dravida Munnetra Kazhgam (AIADMK) was ahead in 118 of the 155 constituencies for which trends were available. The opposition AIADMK-led front had 69 members, as against the 163 of the DMK-Congress in the 234-member state legislative assembly.

However, in Kerala, it was neck-and neck with the ruling Left Front ahead in 64 constituencies against 66 for the Congress-led United Democratic Front (UDF). The state has never returned a ruling party to power, but this time the Left Democratic Front (LDF) was expected to make a better fight of it. The LDF had 98 seats against the UDF’s 42 in the previous state assembly.

In Assam and Puducherry, the ruling Congress party appeared to be making good gains to be able to strengthen its position further in the two states. In Assam, the Congress was leading in counting in 50 constituencies, compared to five for the Asom Gana Parishad (AGP)-Bharatiya Janata Party (BJP) alliance for which trends were available. The Congress-led government had 53 members in the 126-member state assembly. In Puducherry, the Congress was leading in 10 constituencies of the 16 for which trends were available in the 30-member house of representatives.


Another range-bound opening seen for Indian stocks: Friday Market Preview

Macro-economic indicators reveal a slowdown in growth, going forward

The local market is likely to open range-bound following weak industrial output numbers which were announced on Thursday. Besides, elections results from four states and one Union Territory set to be announced today, will keep investors keep investors guarded.

On the global front, the US markets closed with gains on Thursday as a decline in the dollar led to higher commodity prices and boosted the appetite for riskier assets. Markets in Asia were mixed in early trade today as China raised its bank reserve requirements by 50 basis points. The SGX Nifty was 6.50 points higher at 5,493 compared to its previous close of 5,486.50.

The market opened lower on Thursday, tracking the weak Asian markets in early trade and concerns about the industrial output data for March and weekly food inflation numbers. The Sensex opened at 18,525, down 60 points from its previous close and the Nifty was 27 points lower at 5,538. The subdued trend prevailed till the mid-morning session, when a small bounce-back was noticed taking the market to the day's high. However, even after the Index of Industrial Production (IIP) data turned out better than expected, the market dipped into the red.

An easing of the food inflation numbers for the week ended 30th April also did not help the market. The slide continued through the post-noon session with the pressure on metals, banking and capital goods sectors. A weak opening on key European bourses also added to the woes.

The indices touched their intra-day lows at around 3.05pm with the main indices at 18,314 and 5,476. With the exception of the BSE Realty index, all sectoral indices were in the negative.

At the end of trade, the Sensex closed 249 points lower at 18,336 and the Nifty was down 79 points at 5,486. With yesterday’s decline, a fresh downturn has started that may take the Nifty to 5,400 and in case of extreme selling to 5,250.

Markets in the US ended higher on Thursday as a rise in the dollar boosted commodity prices and lured investors to riskier assets. The gains were led by healthcare and commodity stocks Shares of Merck & Co gained 1.6% and Tyson Foods surged 4.6%. On the other hand, financial stocks fell after Rochdale Securities banking analyst Dick Bove put a “sell” rating on Goldman Sachs Group and reduced the price target on the stock to $120 from $163, citing litigation worries. Goldman shares declined 3.5% following the development.

In economic news, weekly initial claims for jobless benefits fell 44,000 to 434,000, while retail sales rose 0.5%, below analysts’ estimates for a 0.6% rise. Producer-price inflation was also a little higher than expected, rising 0.8%.

Among commodities, gold futures edged higher, while silver pared a sharp drop to finish down 71.60 cents, or 2%, at $34.7930 an ounce. Crude oil futures fell as low as $95.25 a barrel before turning around to push back above $100 a barrel. Oil finished up 76 cents, or 0.8%, at $98.97, off sharply from a close of nearly $104 a barrel on Tuesday, and down 13% for May.

The Dow gained 65.89 points (0.52%) at 12,695.92. The S&P 500 added 6.57 points (0.49%) at 1,348.65 and the Nasdaq rose 17.98 points (0.63%) at 2,863.04.

Markets in Asia were mixed in early trade on Friday reacting to China’s rate tightening news. The People’s Bank of China increased banks’ reserve requirements by 50 basis points, the eighth time since October in an attempt to ease inflationary pressures. Also, the Bank of Korea left its key policy rate unchanged the second month in a row.

The Shanghai Composite gained 0.26%, the Jakarta Composite rose 0.30%, the KLSE Composite climbed 0.41%, the Straits Times advanced 0.32% and the Taiwan Weighted was up 0.19%. On the other hand, the Hang Seng declined 0.32%, the Nikkei 225 fell by 0.24% and the Seoul Composite was 0.36% lower in early trade.

Back home, the government on Thursday exempted NBFCs, banking, insurance and power companies from filing their annual documents, including profit and loss accounts, in electronic format XBRL.

Last month, the ministry of corporate affairs (MCA) had said that all big companies would be required to file their annual result of 2010-11 in XBRL to ensure greater transparency and improvement in corporate governance.

The MCA circular released yesterday said that all companies—other than the above—listed in India and their subsidiaries, having paid up capital of Rs5 crore and above, or a turnover of Rs100 crore or above will have to file their document in XBRL format.


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