(1) All borrowings by a member of an SHG from an MFI shall be contracted in the manner, form and format prescribed under the Act.
(2) Every MFI shall keep and maintain a cash book, a ledger and such other books of account in such form and in such manner as may be prescribed.
(3) Every MFI shall, -
(a) deliver or cause to be delivered, to the borrower within seven days from the date on which a loan is made, a statement in the prescribed form showing in clear and distinct terms the amount and date of the loan and of its maturity, the name and address of the functionary of the MFI and the effective rate of interest charged;
(b) upon repayment of a loan in full, the MFI shall obtain an indelible mark on every paper signed by the borrower with words indicating such repayment and provide copies thereof to the borrower.
(4) No MFI shall receive any payment from a borrower on account of any loan without giving him a duly signed receipt for the payment.
(5) An MFI shall, on a demand in writing by the borrower, supply a copy of any document relating to a loan obtained by him, or if the borrower so requires, to any person specified in that behalf in the demand:
Provided that in respect of loans given prior to the commencement of this Act, it shall be obligatory for the lender to specify if any security was accepted from the borrower.
(6) All tranches of repayment shall be made by the SHG or its members at the office of the Gram Panchayat or at a public place designated by the District Collectors only.
(7) MFI shall not deploy any agents for recovery nor shall use any other coercive action either by itself or by its agents for recovery of money from the borrower; and any form of coercive recovery including but not limited to visiting the house of the borrower shall, apart being punishable under the provisions of the Act, empower the Registering Authority to suspend or cancel the license of such an MFI as provided in section 5.
12. Submissions of monthly statement by MFIs - Every MFI shall submit a Monthly Statement to the Registering Authority before 10th day of every month giving therein the list of borrowers, the loan given to each and the interest rate charged on the repayment made.
13. Power to require production of records or documents and power of entry, inspection and seizure - (1) The Registering Authority or any officer authorised by him in this behalf may, to verify whether the business of the MFI is being carried on in accordance with the provisions of this Act, enter the premises of the MFI office or of any person who in his opinion is carrying on the business of lending and call upon him to produce any record or document relating to such business and every such MFI shall allow such inspection and produce such record or document.
(2) The Registering Authority may, for the purposes of sub-section (1), search the premises and seize any record and document as may be necessary and the record or document seized shall be retained only for such period as may be necessary for the purposes of examination, prosecution or other legal action:
Provided that the provisions of sections 100 and 102 of the Code of Criminal Procedure, 1973 (Central Act 2 of 1974) shall, so far as may be, apply to such search and seizure.
(3) The registering authority or the other officer referred to in sub-section
(1) shall also have power to summon and examine the MFI or any person who in his opinion is in a position to furnish relevant information.
14. Complaints - Any SHG or its members or any member of the public can file a complaint regarding violation of the provision of this Act by a MFI before the Registering Authority and the said Authority shall enquire into the same after giving a reasonable opportunity to the MFI to show cause and pass such orders as it may deem fit including an order under section 5 of the Act.
15. Settlement of Disputes - (1) For the protection of debtors and for the settlement of disputes of civil nature between the SHG or its members on the one hand and the MFI on the other hand or between the members of the SHG and the SHG, in relation to the loans granted under this Act to the SHG or its members, the State Government after consultation with the High Court, and by notification,-
(a) shall, as soon as may be after the commencement of this Act, establish for every district in the State a Fast-Track Court;
(b) may establish Fast-Track Court for such other areas in the State, as it may deem necessary.
(2) The Government shall, after consultation with the High Court of Andhra Pradesh specify, by notification, the local limits of the area to which the jurisdiction of a Fast-Track Court shall extend and may, at any time, increase, reduce or alter such limits.
(3) The cases that may be filed before the Fast-Track Court shall be disposed of with in a period of three months.
(4) The decree of the Fast Track Courts shall be liable to be executed in accordance with the procedure under the Code of the Civil Procedure 1908 (Central Act 5 of 1908).
16. Penalty for coercive actions MFIs - (1) All persons who are connected with and responsible for the day-to-day control, business and management of a MFI including the Partners, Directors and the employees who resort to any type of coercive measures against the SHGs 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.
Explanation. - For the purposes of this section, "coercive action" by an MFI against the SHGs or its members of their family members include the following,-
(a) obstructing or using violence to, insulting or intimidating the borrower or his family members, or
(b) persistently following the borrower or his family member from place to place or interfering with any property owned or used by him or depriving him of, or hindering him in the use of any such property, or
(c) frequenting the house or other place where such other person resides or works, or carries on business, or happens to be, or
(d) doing any act calculated to annoy or intimidate such person or the members of his family, or
(e) moving or acting in a manner which causes or is calculated to cause alarm or danger to the person or property of such other person, or
(f) seeking to remove forcibly any document from the borrower which entitles the borrower to a benefit under any Government programme:
Provided that a person who frequents the house or place referred to in clause in order merely to obtain or communicate information shall not be deemed to be using coercive action.
(2) The MFI or the persons who use coercive actions as stated in subsection (1) shall be prosecuted in accordance with the provisions of this Act.
(3) The provisions of the code of Criminal Procedure, 1973, shall, so far as may be, apply to the proceedings before a Fast Track Court, and for the purpose of the said provisions, a Fast Track Court shall be deemed to be a Magistrate.
17. Penalty for carrying on business without registration - All persons who are connected with and responsible for the day-to-day control, business and management of a MFI including the Partners and Directors of such MFI which carries on the business of providing loans either without obtaining registration of the MFI from the Registering Authority under section 3 or extending a further loan without prior approval under sub-section (1) of section 10 of the Act or granting loan in violation of sub-section (4) thereof, shall be liable for punishment with imprisonment for a term which may extend to three years and with fine which may extend to rupees one lakh.
18. Penalty for contravention of the provisions of the Act - Any person who contravenes any provision other than section 3 and section 16 of this Act, shall be punishable with imprisonment for a period of six months or with fine which may extend to ten thousand rupees or with both.
19. Every officer to be public servant - Every officer of the Government and every person acting under the provisions of this Act shall be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code, 1860 (Central Act 45 of 1860).
20. Bar of certain proceedings - (1) No suit, prosecution or other proceedings shall lie against any officer or employee of the Government for any act done or purporting to be done under this Act, without the previous sanction of the Government.
(2) No suit, prosecution or other legal proceedings shall be instituted against any person for anything which is, in good faith, done or intended to be done under this Act or the rules made thereunder.
21. Power to remove difficulties - If any difficulty arises in giving effect to the provisions of this Act, the Government may, by notification remove difficulties by orders not inconsistent with the provisions of this Act, but which appear to them to be necessary or expedient to remove such difficulty.
22. Power to give directions - The Government may, from time to time, issue such orders, instructions and directions not inconsistent with the provisions of this Act and the rules made thereunder to the officers for the proper administration of the Act, and such officers and all other persons employed in the enforcement of the Act, shall comply with such orders, instructions and directions.
23. Power to make rules - (1) The State Government may, by notification, make rules for carrying out the purposes of this Act.
(2) Every rule made under this Act shall, immediately after it is made, be laid before the Legislature of the State, if it is in session and if it is not in session, in the session immediately following for a total period of fourteen days which may be comprised in one session or in two successive sessions and if, before the expiration of the session in which it is so laid or the session immediately following the Legislature agrees in making any modification in the rule or in the annulment of the rule, the rule shall, from the date on which the modification or annulment is notified, have effect only in such modified form or shall stand annulled as the case may be so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under the rule.
24. Annual Report on the administration of the Act - The Government shall prepare an annual report on the administration of this Act and the same shall be placed before the State Legislature.
25. Repeal of Ordinance 9 of 2010 - The Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Ordinance, 2010 is hereby repealed.
A. SHANKAR NARAYANA, Secretary to Government, Legislative Affairs & Justice, Law Department