Manipal, Nov 28, 2019: Runamuktha Horata Samithi has urged the state grnment to waive the loans borrowed by poor individuals from micro finance institutions under Debt Relief Act 2019.
Samithi Convener B M Bhat said micro finances operating in the state had flouted the guidelines of the Centre and were engaged in collecting exorbitant interest from loanees.
“The institutions have been charging exorbitant interest rates for the loans they offer to the poor. The borrowers have to pay the loan installments without fail. If they delay in clearing the payment, the representatives of the institutions visit their homes and harass them. The micro finance institutions claim that they have been functioning as per the guidelines of the Reserve Bank of India, which is far from truth.”
A majority of these institutions are part of corporate companies. The companies have transferred a portion of their income to charitable trust to get exemption from tax under Section 8 of the Company Act. They even have promised to the government to work for the welfare of the poor in eradicating poverty in the country and have availed licences to function.
After getting the permission from the government, they are engaged in financial business which is against the act. As per the Micro Finance Institutions Act, these financial institutions that are part of charitable trust should finance the poor in taking up self employment, train them in self employment and also work towards the empowerment of women, he added.
Bhat said some of these micro financial institutions were collecting 19.75% to 31% interest, which is against state government’s order on not to collect more than 16% interest on the loans borrowed.
He urged the government to initiate strict action against those micro finance institutions that are violating Act. In spite of possessing RBI licence, they are not adhering to the guidelines. Criminal cases should be booked against the representatives of micro finance institutions who ill treat women and blackmail them in the name of possessing a copy of Aadhaar card.
The Samithi, urging the fulfillment of demands, will organise a protest at Nehru Maidan in Mangaluru on November 28 at 10 am (Today).