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Police arrests staff of microfinance cos on harassment charge

Andhra Pradesh Police arrest three people working with SKS Microfinance and Spandana on a complaint of harassment by a borrower.

twitter-logoPTI | October 22, 2010 | Updated 13:28 IST

The Andhra Pradesh Police on Friday said it has arrested three people working with SKS Microfinance and Spandana on a complaint of harassment by a borrower, and might book the companies' respective promoters Vikram Akula and Padmaja Reddy under a new Ordinance to check coercive methods of loan recovery.

The borrower, Ammulu, filed the complaint with the Yemmiganur police station in Kurnool district, about 270 km from Hyderabad, on Thursday night. A case was registered under Section 16 of the AP Microfinance Institutions (Regulation of Money Lending) Ordinance-2010 and three persons belonging to SKS and Spandana were arrested.

"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," CH Srikanth, Superintendent of Police (Kurnool) said.

This is the first case booked in the State under the new Ordinance issued a week ago.

Section 16 of the Ordinance says all persons connected with and responsible for the day-to-day control, business and management of a microfinance institution, including the partners, directors and the employees, who resort to any type of coercive measures against the self-help groups or its members, or 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.

According to Kurnool police, Ammulu borrowed a total of Rs 70,000 from SKS and Spandana and later defaulted on payments.

"She has been avoiding the collections officials of the companies for the past two months. According to the complaint lodged with us she is being harassed by the company officials for the repayment. We inquired in to the matter and registered cases," Guna Sekhar, inspector of police, Yemmiganur, said.

He said a case has been also booked under Sections 341 (Punishment for wrongful restraint) of IPC and sections related to Word, gesture or act intended to insult the modesty of a woman and punishment for criminal intimidation.

Arvind Rao, AP director general of Police, said the department has been instructed to be strict on cases related to microfinance.

"We held video conference with all the district SPs and Commissioners of Police and issued guidelines to book cases under the new Ordinance," the DGP said.

The ordinance was aimed at regulating MFIs by making registration with the state compulsory and also disclosure of interest rate charged. The move came following reports of harassment of borrowers and also incidents of suicides, although the companies denied that the suicides were unrelated to the loans.

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