HC notice to RBI on plea alleging loan recovery by micro financing institutions

The Madras High Court on Wednesday issued notice to the Reserve Bank of India (RBI) and the Tamil Nadu government on a petition seeking action against micro- finance institutions that allegedly insisting the members of self-help groups (SHG) to repay loan during COVID-19 moratorium period.

The Madras High Court on Wednesday issued notice to the Reserve Bank of India (RBI) and the Tamil Nadu government on a petition seeking action against micro- finance institutions that allegedly insisting the members of self-help groups (SHG) to repay loan during COVID-19 moratorium period. A bench comprising Justice MM Sundresh and Justice R Hemalatha directed the RBI and the government to file their replies within four weeks.

Petitioner All India Democratic Womens Association (AIDWA) represented by S Suganthi also wanted the court to direct the state to set up a helpline and appoint a special officer in each district to receive complaints and to take action against such micro-financing institutions. It also wanted a direction to the RBI to extend the moratorium by another six months.

The RBI had initially announced three months moratorium on loan repayments in view of the COVID-19 national lockdown and later extended it by another three months till August this year..