Guwahati: Assam cabinet on Sunday proposed to come up with a new act for microfinance institutions.

Assam industry minister, Chandra Mohan Patowary after the cabinet meeting said, “New Act proposal for micro-financial institutions in line with RBI guidelines is approved by the cabinet.”

Recently Assam finance minister, Himanta Biswa Sarma said the state government will bring a law within one month barring agents from going to the home of borrowers for recovery of debt.

Sarma while speaking in Tinsukia district had said, “Recently a group of women from a joint liability group met me and narrated that agents torment them at their houses for recovery of loan.”

He added, “With one month we will bring a law which will forbid these agents from going to the home for recovery of loan.”

Last year Assam saw a spate of loan defaults and stress in rural households, raising the specter of repayment crisis that hit Andhra Pradesh in 2010. A section of microfinance borrowers and local groups were demanding a ban on microfinance.

An internal study conducted by Microfinance Institutions Network (MFIN) last year, which is the self-regulator for the sector, showed that indebtedness of micro borrowers in Assam is more than double the national average while it is four times in these five districts.

Leader of opposition in Assam assembly Debabrata Saikia had sought Assam Governor’s assistance in directing the state government to draft a law to protect the interests of rural people.

Saikia in a letter to Governor Jagdish Mukhi last year said that the weekly or fortnightly system of loan repayment must be done away with. Many of the victims have been forced to resort to distress-sale of livestock, power tillers, two-wheeled vehicles and even land and houses. Some have been forced to lock their houses and migrate to Bangalore and work in private companies.”

He added, “Few persons have even committed suicide after falling into the debt trap.”

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