SKS Microfinance today challenged in the Supreme Court the special act passed by the Andhra Pradesh government to regulate microfinance institutions in the state after allegations that their high interest rates and strong-arm recovery methods led to suicides by farmers.
A bench of justices Markandey Katju and Gyan Sudha Mishra issued notice to the state government, directing it to file reply and posted the matter for hearing in the third week of July.
Senior Advocate Fali S Nariman, appearing for SKS, the country’s largest and only listed microfinance company, submitted that the state government has no power to regulate the sector.
The state government passed the Andhra Pradesh Microfinance Institutions (Regulation of Money lending) Act, 2010, to ensure that it has oversight on the sector.
According to the petitioner, microfinance sector falls under the central list and is not a state subject on which the Andhra Pradesh government could pass any act.