New Delhi, October 17: SKS Microfinance today said it will seek legal opinion on whether the Andhra Pradesh government’s new ordinance to regulate the microfinance sector will be applicable to the company.
The ordinance is aimed at regulating Microfinance Institutions (MFIs), which have come under criticism for charging exorbitant interest rates from the poor and for their strong arm tactics for recovering money.
“We are seeking legal clarification as to whether the ordinance will apply to NBFC MFIs, as SKS Microfinance is not an NBFC (as per the Reserve Bank of India rules outlined in the ordinance),” the company said in a statement.
NBFC MFIs are generally those entities, which have been given the NBFC (Non-Banking Finance Company) status by the central bank.
According to SKS, the microfinance industry association — Microfinance Institutions Network (MFIN) — is planning to “move a stay petition against the ordinance”.
–Agencies