MICROCAPITAL BRIEF: Supreme Court Schedules Hearing on Petition Filed by SKS Microfinance Against Over Regulation of Moneylending Act of India's State of Andhra Pradesh

SKS Microfinance, an Indian microfinance institution (MFI), has filed a petition with the Supreme Court of India seeking a stay to prevent the enforcement of the Regulation of Microlending Act issued by the government of the Indian state of Andhra Pradesh.

The Regulation of Moneylending Act was passed in December 2010 in response to complaints of high interest rates and coercive loan recovery practices by MFIs and their agents. SKS Microfinance has objected to the Act, stating that by requiring approval of every micro-loan application by state government authorities, it causes an undue burden on business. It is reported that Supreme Court Justices Markandey Katju and Gyan Sudha Mishra have issued a notice to the Andhra Pradesh state government to file a reply and have scheduled the case for July 2011.

By: Alexandra Pattee, Research Associate

About SKS Microfinance: SKS Microfinance is a microfinance institution (MFI) that was launched in 1998. It delivers microfinance products through a group-lending model to impoverished women in India as a for-profit, non-banking finance company. SKS converted into a public limited company in May 2009 and launched an initial public offering on July 28, 2010. Its equity investors include Quantum Hedge Fund, Sequoia Capital, Vinod Khosla, Small Industries Development Bank of India, Bajaj Allianz, Yatish Trading, Kismet Capital, Sandstone Capital, Silicon Valley Bank and Unitus. According to 2010 data from the US-based nonprofit data provider Microfinance Information Exchange (MIX), SKS Microfinance reported total assets of USD 1.2 billion, a gross loan portfolio of USD 1.2 billion, approximately 6.6 million borrowers, return on assets (ROA) of 6.3 percent and return on equity (ROE) of 22.4 percent.

Sources and Resources:

[1] Daily News & Analysis, “SKS moves Supreme Court against Andhra’s ‘obstructing’ microfinance Act”, http://www.dnaindia.com/money/report_sks-moves-sc-against-andhras-obstructing-microfinance-act_1542598

MicroCapital.org Article, May 19, 2011, “Confusion Continues Over Regulation of Microfinance Institutions (MFIs) in India, State of Andhra Pradesh May Adjust Law to Reconcile With Federal Rules”, https://www.microcapital.org/microcapital-brief-confusion-continues-over-regulation-of-microfinance-institutions-mfis-in-india-state-of-andhra-pradesh-may-adjust-law-to-reconcile-with-federal-rules/

MicroCapital.org Article, March 14, 2011, “India’s Andhra Pradesh State to Tighten Local Microfinance Institutions (Regulation of Moneylending) Act”, https://www.microcapital.org/microcapital-brief-indias-andhra-pradesh-state-to-tighten-local-microfinance-institutions-regulation-of-moneylending-act/

MicroCapital.org Article, April 19, 2011, “Public-Sector Bank, Andhra Pradesh State Government May Launch Non-Banking Financial Company (NBFC) to Extend Microcredit to the Poor”, https://www.microcapital.org/microcapital-brief-public-sector-bank-andhra-pradesh-state-government-may-launch-non-banking-financial-company-nbfc-to-extend-microcredit-to-the-poor/

MicroCapital.org Article, December 17, 2010, “Local Government in Indian State of Andhra Pradesh Considers Additional Microfinance Regulation, Requires Disclosure of Operational Procedures”, https://www.microcapital.org/microcapital-brief-local-government-in-indian-state-of-andhra-pradesh-considers-additional-microfinance-regulation-requires-disclosure-of-operational-procedures/

MicroCapital Universe Profile: SKS Microfinance, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SKS+Microfinance

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Supreme Court Schedules Hearing on Petition Filed by SKS Microfinance Against Over Regulation of Moneylending Act of India’s State of Andhra Pradesh

Similar Posts: