Regulatory Body of Micro Finance Companies give Clarity on Runamuktha Kayide
Regulatory Body of Micro Finance Companies give Clarity on Runamuktha (Karnataka Debt Relief Act 2018), during a Press Meet held at Mangaluru Press Club. Grief redressal helpline for people with confusions in repayment of loans and other issues related to loans taken from Micro- finance Institutions, they can call TOLL-FREE Helpline numbers at- 0824-2499632 & 7619508496 and will be operational from Monday, 16th December, 2019.
Mangaluru: As known, Micro Finance companies are financial services targeted at individuals and small businesses who lack access to conventional banking and related services. They have been a big boon for people who avail small time financial assistance and loans. The main goal / aim of providing assistance to small time business people to enhance their financial capabilities anywhere from Rs. 10000/- to 1.25 Lakhs. Most of them focus on Women Empowerment and self reliance among women entrepreneurs to be financially independent.
Micro-finance Companies have been doing very well both in terms of providing loans and recovering loans and the recovery percentage has been almost 99 to 99.9%. There have been no major issues but, off-late after Ex-Chief Minister Kumaraswamy made an announcement of Loan Waiver, some anti-social elements and people have been spreading wrong message of Loans provided by Micro Finance Companies also being waivered. In consultation with the DC of Mangaluru, Association of Karnataka Micro-finance Institutions (AKMi) has agreed to open a grief redressal helpline for people with confusions in repayment of loans and other issues related to loans taken from Micro- finance Institutions. The TOLL-FREE Helpline numbers are 0824-2499632 & 7619508496 and will be operational from this Monday, the 16th of December, 2019.
Around 6 crores families in India are utilizing Micro- finance services. Around 30 Lakh families in Karnataka utilize Microfinance services provided by around 30 institutions. In Dakshin Kannada alone, there are Two Lakh Families utilizing Micro-finance services and close to 500 Crores of money has been lent by these institutions to people in Dakshina Kannada. Very much like the high literacy rates, the loan recovery has also been around 99% till September, 2019 till the announcement by Ex-Chief Minister was made and some people, exceptionally in Dakshina Kannada have been wrongly misguiding people on the loan recovery policy and this confusion has reduced the loan recovery to 60%
Out of 2 Lakh families that avail loans from 12 to 15 micro-finance institutions in DK, an approximate of Rs. 500 crores has been lent and only 60% recovery is happening for the past two months from September. The Office bearers of AKMi were at the Press club sharing statistics of people using micro finance in Dakshina Kannada.
Addressing the media persons during the press meet, V. N. Hegde, CEO -AKMI (Association of Karnataka Micro-finance Institutions) said, “This Press conference is held to provide clarity on the above issue and we request media houses to help us create awareness on not heading to rumors spread by some people who are disturbing the system and the repercussions that could occur to people availing loans and not paying as per norms Micro Finance companies have registrations and regulations approved by approved by RBI and have a very systematic approach in providing, sustaining and recovering loans provided to individuals and small time companies.
“The Government of India recognized Micro-finance as an important tool in ensuring financial inclusion. We have over 30 lakh customers in Karnataka. We request borrowers to continue with timely repayment of loans so as to maintain a good record with the credit bureau and not get waylaid by false promises. It is through the Micro-finance industry that the low-income group has gained access to credit in a more organized manner compared to their dependency on moneylenders in the absence of formal credit” added V N Hegde.
Also speaking on the occasion, Panchakshari, Executive Member, AKMi, Chief Operating Officer, BSS Micro-finance Ltd said, ” Karnataka is a financially responsible state. It has one of the lowest loan defaults in the microfinance sector of the country. If people start believing misinformation, it may impact the livelihood of thousands of undeserved families, affect their credit history with the potential of alienating them from future loans. We urge the borrowers not to take cognizance of rumours. Our members are promoting financial literacy sessions and encouraging responsible borrowing among clients.”
Shantha Kumar, Secretary – AKMi & Zonal Head, L& T Financial Services Ltd., South India said, ” Association of Karnataka Micro-finance Institutions (AKMI), Micro-finance Institutions Network (MFIN), and Sa-Dhan, the industry associations for Micro-finance, want to clarify today that loans for micro-finance entities are not covered under the State Runamuktha Kayide. In the last few days there has been some false propaganda around this. The micro-finance industry is governed by the stringent regulations of the RBI and therefore loans cannot be waived off and need to be repaid on time. Micro-finance institutions operate using the established Joint Lending Model which allows the women to source group loans, which provides them the comfort of each other which sharing the loan liability”.
“The institutions provide the women small loans with easy repayment options. The women do not need to provide any collateral to access credit. These institutions provide them with a loan card which makes it easier for them to track their loans and repayments. Loan repayment can be weekly, forthrightly and monthly and slowly bit by bit, the women borrower is able to repay her loan. The credit bureau discipline is important both from the lenders and borrowers end to ensure that lending happens responsibly. This timely access to small, collateral free loans in easy payback options by reliable organizations is the greater differentiators for Micro- finance” added Shantha Kumar.
Ramesh K- Divisional manager BFIL and Manjunath of Grama Koota were also present on the dais during the press meet. It is also noted that there is a dedicated grievance redressal mechanism in place for Microfinance clients as prescribed by the RBI. For any grievance, the loan taker can contact the concerned Head Office of the Microfinance Institution. Every loan card has grievance redressal cell contact details. In case grievances are not addressed within 15 days, clients can contact industry associations AKMI, Sa-Dhan and/or MFIN. If the grievance is not redressed within 30 days, a client can approach the Banking Ombudsman of RBI. In addition to this, Mangaluru will also shortly have a dedicated District Level Grievance Redressal Mechanism (GRM) which will ensure easy access to clients to raise their issues regarding loans, processes, repayments, over-indebtedness or any other grievance.
About the Associations :
MFIN – is the premier industry association and Self-Regulatory Organization (SRO) for the microfinance industry in India and its current primary members consists of 54 NBFC-MFIs along with 35 Associates including Banks, Small Finance Banks (SFBs) and NBFCs. MFIN works closely with regulators and other key stakeholders to achieve the larger financial inclusions goals through microfinance.
Sa-Dhan – the Association of Community Development Finance Institution, has been working for more than one and a half decades in supporting and strengthening the agenda of Financial Inclusion in India. It is recognized by the RBI as a Self-Regulatory Organisation (SRO) for the Microfinance Sector. At present, Sa-Dhan has the membership base of 205 institutions including NBFC-MFI, NBFCs, Societies, Trusts, Cooperatives, and SHPIs. It also including Banks / SFB, Rating agencies and Capacity Building agencies, representing all legal forms and operating models.
AKMI – Association of Karnataka Microfinance Institutions (AKMI) was established in 2007 to bring in better transparency, governance, client protection and ethical practice amongst the MFIs operating in the state of Karnataka.
