Microfinance Focus, October 13, 2011: Mr Reddy Subrahmnayam, Principal Secretary, Department of Rural Development, Government of Andhra Pradesh (AP), told Hindu Business Line that the AP Government is not ready to take forward the special package offered by microfinance institutions to recover loan dues of over Rs 6,000 crore.

Major microfinance institutions, led by the Microfinance Institutions Network, have offered a special package to the borrowers who are ready to repay the dues, including a reduction in the interest rate to 15 per cent and a prolonged period of repayment.

“The microfinance companies asked us to take them back to people by convening meetings with Self-Help Groups. But, we should realise that a loan is a contractual agreement between the borrowers and MFIs. We can possibly ask the banks to do so. It is more appropriate for them to get involved in the issue as they also have a stake in recovery,'' he said.

Post promulgation of AP Microfinance Ordinance, loan repayment by borrowers dropped to 10-12 percent in the state and the brought the sector to a standstill.