Andhra Pradesh Government is planning to challenge an interim order of the Supreme Court allowing SKS Microfinance to operate in the State bypassing the AP MFI Act.

While hearing a leave petition filed by SKS early this week, the apex court upheld an interim order of the AP High Court given in October 2010 permitting SKS to carry on business in the State.

This would mean that SKS, worst-hit by the AP MFI crisis, can now lend without prior approval of the State Government which is mandated by the AP Microfinance (Regulation of Moneylending) Act, 2010.

On Thursday, S. Dilli Raj, Chief Financial Officer of SKS, said the company intended to carry on business in AP in the wake of Supreme Court judgment.

The State Government, however, is not relenting. “We will challenge the interim order of the Supreme Court.

“We have not received any notices yet from the court on the issue,” Reddy Subrahmanyam, Principal Secretary, Rural Development, told Business Line .

The Government has been maintaining that as the act was done by the legislature and should be supreme.

“Our objective is to protect the interests of the poor and members of self-help groups,” the official said.

Over Rs 6,000-crore old dues of MFIs have been locked up in the State since the enactment of AP MFI Act in 2010 due to harassment of clients by recovery agents leading to suicides.

Resuming business in the State — once the largest market for MFIs — would be vital for SKS as it has been stating that disbursal of fresh loans would also result in recovery of old dues.

naga.gunturi@thehindu.co.in