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Law for Protection from Microloan Harassment in Assam soon

The law said that not more than two MFIs shall lend to the same borrowers

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Micro Finance Institutions
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GUWAHATI: Assam government tabled the Assam Micro Finance Institutions (Regulation of Money Lending) bill, 2020 aiming to protect people belonging to economically vulnerable groups from undue hardship of interest rates and coercive means of recovery by micro finance institutions (MFI).

The bill said that all MFIs operating in Assam will have to apply for registration, within 30 days from the date of enforcement of this act.

As per the bill, all microcredit activities shall be reduced during floods, other periods of distress or natural calamities and shall be given a minimum period of three months of a moratorium on interest payment and may be extended by multiples of the same.

It added that not more than two MFIs shall lend to the same borrowers.“No MFIs shall seek any security from a borrower by way of pawn, pledge or other security for the loan. The bill provided for standard loan agreement and a loan card must be provided to the borrower. The effective rate of interest charged shall be prominently displayed,” the bill added.

The bill also provided for imprisonment for a period of six months or a penalty which may extend to Rs 10,000 or with both for violations of the provisions. For those using coercive actions, the provisions of the Code of Criminal Procedure 1973 shall apply to a proceeding before a fast track court.