The Andhra Pradesh High Court has asked the state government to decide the fate of its microfinance Act after the central enactment comes into effect. According to a judgment on Monday, in the wake of an impending central enactment it would be a futile exercise for the court to examine the legislative competence or otherwise of the state to legislate the impugned enactment. The court backed the Micro Finance Institutions (Regulation and Development) Bill, 2012, which is in the process of being approved by Parliament.
“We are of the view that the directions issued by the RBI on December 2, 2011, as modified on August 3, 2012, coupled with the provisions of chapter III B of the RBI Act will protect the interests of the self-help groups from usurious interest rates and coercive means of recovery with which object the impugned Act was enacted,” the judgment said. “Apart from this, the Micro Finance Institutions (Development and Regulation) Bill, 2012, introduced by the central government in the Lok Sabha, is a complete code in itself as regards the microfinance institutions.”
Once that Bill takes the shape of an enactment, we are of the opinion that it will govern every aspect of the microfinance institutions at all levels and in all respects and all the issues raised by the petitioners herein."
The bench concluded its judgement by suggesting, "Is it necessary to have the impugned enactment also on the statute book and a decision may, accordingly, be taken after the central enactment comes into operation."
