AP’s MFIs owe SBI `300 cr

Nov 19, 2010 |

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Hyderabad, Nov. 18: State Bank of India (SBI) has an exposure of `300 crore to the troubled microfinance sector in Andhra Pradesh and the public sector lender feels the loans are “safe”.

Loans have been given to two microfinance institutions (MFIs) in the state, Mr K. Shiv Kumar, deputy managing director of SBI, said on Thursday.

“We don’t have much exposure compared to some other banks in the state. We have about `300 crore in Andhra Pradesh. We have already disbursed the loans,” he said. He, however, admitted that the situation is “grim” at the ground level in Andhra Pradesh after the state promulgated an ordinance last month regulating MFIs, who have been accused of deploying coercive methods to recover loans.

To a query, the top SBI executive said there are no applications pending from any MFI with the bank for further loan. “We have lent to two companies. Whenever there is requirement we do give loans. There is no new loan proposal from the MFIs. We believe the money is safe.”

Meanwhile the Andhra Pradesh government on Thursday filed its reply to the writ petition filed by SKS, MFIN and others challenging the ordinance promulgated by the State Government on October 15.

The government said in its reply that the Microfinance ordinance was brought not to harass but regulate the industry. It also said the state government is a competent authority to bring out such ordinance.

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