New Delhi: Don’t carry more than Rs 50,000 in cash, carry proper documentation for all money, don’t argue with electoral officials — these are some of the cautionary measures prescribed by the Micro-Finance Institutions Network (M-FIN) to its members and employees to ensure minimum disruption in business during the election season.
The world’s largest democracy is set for a seven-phase election, beginning 11 April, and micro-finance institutions are keen to ensure that their lending and collection activity, which is primarily in cash, isn’t affected by the increased scrutiny during this period.
Usually, during elections, the Election Commission and the Income Tax department keep a close watch on cash movement.
While M-FIN, an umbrella body in the micro-finance sector, has been promoting best practices among its members and trying to keep district authorities and administrators in check even in previous elections, the sense of urgency is greater this time around with growing instances of crackdowns on cash by the EC.
In elections to five states in December last year, the commission had seized over Rs 200 crore in cash. In contrast, it had seized around Rs 300 crore during the general elections in 2014.
Also read: Why Model Code of Conduct for elections cannot act against offending politicians
M-FIN writes to all state EC officials
In addition to the cautionary measures and protocols prescribed to the member firms and its field agents, M-FIN has also written to the chief electoral officers of all states informing them about the micro-finance institutions operating in the state. The letters were written within days of the EC announcing the election dates on 10 March.
Harsh Shrivastava, CEO of M-FIN, said the letters detail the presence of all MFIs in a particular state with the aim to protect the staff from any crackdown. In addition, all MFI branches will carry acknowledgement issued by the CEO in response to M-FIN’s letter.
“More than 95 per cent of the collections by micro-finance institutions are in cash. So we have taken pro-active measures to ensure that there is no disruption in the business during election season,” Shrivastava said. “We are also closely working with the district authorities to ensure smooth operations.”
Cash holdings by a micro-finance agent may vary from a few thousand rupees to lakhs depending on the timing and place.
As of 31 December 2018, the total outstanding loan portfolio of the micro-finance industry was Rs 1.66 lakh crore, registering a growth of more than 43 per cent over the corresponding period in the previous year. The customer base has also expanded by 24 per cent to Rs 8.91 crore in the same period.
Also read: Updating election Model Code of Conduct is only way to keep national security out of rallies