MACS Fill Vacuum Left by MFIs


MACS fill vacuum left by MFIs







July 26: While the bank-funded Micro Finance Institutions (MFI) are maintaining a low profile following a string of controversies, the micro-lending schemes run under the AP Mutually Aided Co-operative Society (MACS) Act, 1995, are making a comeback with more self-help groups opting for it to access low-interest loans. There is a growing feeling that the micro-lending model under the MACS system is better as neither there are motorbike-borne MFI company agents to harass the self-help group (SHG) member nor do they need to pay exorbitant rate of interest.

Unlike the banks-funded MFI model, MACS system entirely depends on the financial contribution of its members, whose money is rotated among them. For instance, if an SHG member were to borrow Rs 30,000 from a society run under MACS model, at the end of 10 months, the borrower would have to pay Rs 33,300 at two per cent interest rate.

According to K. Arogyam, chief executive officer (CEO) of city-based VANAM Mahila Paraspara Sahayaka Sahakara Podupu Abhirudhi, Parapathi and Marketing Sangam Ltd, a registered society under the AP MACS Act, their annual turnover in three districts is Rs 10 crore. Besides Nalgonga and Mahbubnagar, VANAM has presence in six mandals of Warangal with a membership of 6,500 and 600 SHGs, some of who turned up to attend their fourth annual meeting at Ambedkar Bhavan on Tuesday to narrate their success stories and to listen to audit report.

“The government should ban all MFI companies as they are run only on profit motive and have become legalised institutions to collect exorbitant rate of interest from poor,” says Ms Arogya, while hailing the MACS model. However, MFI expert and KU Economics professor K. Venkatanarayana has a word of caution for SHGs even as societies under MACS model try to cash in on in the aftermath of the collapse of MFIs. “There are 453 registered MACS societies in Warangal alone but till date nobody knows whether they are getting their annual reports audited by a chartered accountant, which they are required to do under the Act without fail,” he said. In the absence of CA audited annual reports, Prof. Venkatanarayana said that MACS too can take their members for a ride as they are completely autonomous societies.

Incidentally, an RTI application seeking information about how many MACS model societies are regularly getting their annual reports audited by CAs is reportedly being evaded by the district cooperative officer Sanjeeva Reddy.

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