As many as 30 rural borrowers have committed suicide in Andhra Pradesh in the last few months following their inability to pay back loans taken from microfinance institutions at exorbitant interest rates.

With one more case of suicide due to harassment by a microfinance institution coming to light, the Andhra Pradesh government has been jolted into action against the serious irregularities and arm-twisting methods for recovery of money that MFIs adopt.

Andhra Chief Minister K Rosaiah, while issuing a stern warning to the microfinance institutions against charging exorbitant rates of interest and harassing the rural poor, said that the state government will promulgate an ordinance to regulate the activities of the MFIs and will not allow the harassment and exploitation of the poor and women.

Rosaiah, who also had a meeting with the officials and the bankers on the issue on Wednesday, has convened a cabinet meeting on Thursday to discuss the MFI issue.

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The Andhra Pradesh chief minister also wrote a letter to Prime Minister Manmohan Singh seeking his intervention to see that the passing of a Bill in the Parliament to regulate the MFIs was given priority.

Rosaiah said the Bill should be re-examined in view of the growing irregularities indulged in by MFIs and the Reserve Bank of India be asked to take effective measures to control corrupt practices.

He said that the unregulated MFI activity has resulted in multiple financing to the same rural poor household, often done without due diligence.

Since the rural poor lack money to service these loans, repayment of the older loans by them is being done by taking a fresh loan and this is resulting in an ever-rising spiral of debt.

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The chief minister pointed out that MFIs were also charging usurious interest rates, resulting in hyper-profits to MFIs while the poor are driven to suicide under the debt burden often recovered using brutal methods.

The state government and political parties have swung in to action after the state witnessed as many as 30 suicides by the poor borrowers due to the pressure and harassment by the recovery agents of MFIs all over the state. Last two months alone have seen 17 suicides in 8 districts.

In an indication of how the borrowers were arm-twisted and pressurised by the agents, a 10-year-old girl -- Duga Anuksha -- was abducted from her house in a village of Visakhapatanam district five days ago to force her mother Daralamma to repay the loan to a MFI.

Incidents of suicides have been reported from districts of Warangal, Ranga Reddy, Medak and Nizamabad in Telangana region, from Kunrool, Anantapur and Kadapa in Rayala Seema and West Godavari district of Andhra region.

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The unregulated activities of MFIs have also raised the heckles of all the political parties who issued a joint appeal to the rural people to resist the pressure of MFIs and alert them and the government if they were harassed.

At an all party meeting, organised by the Communist Party of India, all parties including the Congress, Telugu Desam Party, etc, urged the government to take effective measures to deal with the situation to control MFIs.

Rajya Sabha member M V Mysoora Reddy, representing the Telugu Desam at the meeting, said that MFIs had become so exploitative and insensitive that they were charging an exorbitant interest rate of 30 per cent to 50 per cent from the rural poor when they were getting the funds from the banks at an interest rate of 13 per cent only.

He and others demanded that the banks themselves should extend the loans to the rural poor and women's self-help groups at a low interest of 8 per cent as was done in case of big business houses and industrialists like Mukesh Ambani.