SKS Microfinance and Spandana Staff arrested by Police

Today , the Andhra Pradesh Police arrested three people who are employees of SKS Microfinance and Spandana Microfinance alleging they were resorting to forceful collection from MFI clients. The arrest was carried out after the Andhra Pradesh Police received a complaint from a borrower accusing them of harassment.

Some police officers indicated that the promoters of SKS Microfinance and Spandana – Vikram Akula and Padmaja Reddy could face arrest under the provisions of the new Ordinance.sks staff arrested

A MFI client by name Ammulu had yesterday night filed a complaint with the Yemmiganur police station in Kurnool district. Kurnool is located at a distance of 270 KM from the capital of Andhra Pradesh – Hyderabad. A case was then registered under Section 16 of the newly passed ordinance of the AP Microfinance Institutions (Regulation of Money Lending) Ordinance-2010 and three persons belonging to SKS and Spandana were picked up by the police.

Speaking to NDTV , CH Srikanth, Superintendent of Police for Kurnool said “After investigation we came to know that the recovery officials were acting under the instructions of their company management. So under the new Ordinance Vikram Akula and Padmaja Reddy may also come into the case,”

This is the first time a case has been booked against Microfinance Companies under the new ordinance passed in Andhra Pradesh last week.According to police, Ammulu had borrowed around Rs. 70,000 from both SKS Microfinance and Spandana Microfinance and had defaulted on her payments more than 2 months ago. Since the day she defaulted she had avoided meeting the MFI Officials. And recently when they contacted her about her defaults she is said to have filed a police complaint against these microfinance companies.

What section 16 of Andhra Pradesh Microfinance Institutions (regulation of money lending) Ordinance, 2010 says about penalties for coercive actions MFIs ?

Section 16. (1) All persons who are connected with and responsible for the day-to-day control, business and management of a MFI including the Partners, Directors and the employees who resort to any type of coercive measures against the SHGs or its members of their family members shall be liable for punishment of imprisonment which may extend up to a period of three years or with fine which may extend to one lakh rupees or with both.

Explanation:- For the purposes of this section, “coercive action” by an MFI against the SHGs or its members of their family members include the following –

(a) obstructing or using violence to, insulting or intimidating the borrower or his family members, or

(b) persistently following the borrower or his family member from place to place or interfering with any property owned or used by him or depriving him of, or hindering him in, the use of any such property

(c) frequenting the house or other place where such other person resides or works, or carries on business, or happens to be, or

(d) doing any act calculated to annoy or intimidate such person or the members of his family, or

(e) moving or acting in a manner which causes or is calculated to cause alarm or danger to the person or property of such other person

(f) seeking to remove forcibly any document from the borrower which entitles the borrower to a benefit under any

Government programme.

Provided that a person who frequents the house or place referred to in clause (c) in order merely to obtain or communicate information shall not be deemed to be using coercive action.

(2) The MFI or the persons who use coercive actions as stated in sub section (1) shall be prosecuted in accordance with the provisions of this Ordinance.

(3) The provisions of the Code of Criminal Procedure, 1973, shall, so far as may be, apply to the proceedings before a Fast Track Court, and for the purpose of the said provisions, a Fast Track Court shall be deemed to be a Magistrate.

Download the full copy of the Ordinance Andhra Pradesh Microfinance Institutions (regulation of money lending) Ordinance, 2010

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