NEW DELHI (Reuters) - The Andhra Pradesh High Court has asked microfinance institutions operating in the state to register with the state government within seven days as required by a recent ordinance, according to court documents.
The move comes three days after the Microfinance Institutions Network (MFIN), a body of microfinance institutions in India, on Tuesday filed a petition in the Andhra Pradesh High Court against the new state government ordinance.
Last week, media reports had said the Andhra Pradesh government in southern India through an ordinance imposed a limit on rates that the industry can charge customers and also curbed aggressive recovery practices following several suicides by borrowers in the state.
A spokesman for SKS Microfinance, India’s leading and only listed lender to tiny businesses, said one SKS employee was arrested on Friday after complaints of aggressive recovery-related harassment.
“The issue is that the district authorities were following the ordinance, which enables them to arrest,” he added.
“However, the High Court has passed an order..(as per the order) no arrests permitted, only FIRs (first information report) can be filed,” the spokesman said.
Reporting by Anurag Kotoky; Editing by Harish Nambiar
Our Standards: The Thomson Reuters Trust Principles.