During Jan-Mar 2013, Andhra Pradesh accounted for 22 per cent of the gross loan portfolio held by all the microfinance companies (MFIs) that are the members of the industry body Micro Finance Institutions Network (MFIN).
However, all of the above loan exposure turned non performing asset (NPA). According to a government report, only L&T Finance has renewed its registration to conduct operations till October 2013.
But sources from the microfinance industry said a few other MFIs had also recently renewed their registrations with the respective district authorities as required by the state MFI legislation.
According to a leading official of Andhra Pradesh government, MFIs are always allowed to conduct their operations in compliance with the provisions of the Act. But they need to inform the government whom they are going to give a loan and for what purpose, he said.
Multiple lending, which was considered as a leading cause triggering a spate of suicides on the back of the alleged coercive recovery practices by the field staff of MFIs, is prohibited under the AP MFI Act.
Therefore, private micro lenders cannot approach most of the women members of SHGs for fresh loans as long as the Act is in force.
SKS Microfinance and other companies had challenged the state legislation in the high court, which turned down their request leading to their seeking intervention of the Supreme Court.
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