The paper documents the disastrous consequences of legislation passed by Government of Andhra Pradesh in December 2010, and how this has brought about a national crisis. The legislation - the AP Act - not only undermines India’s financial inclusion agenda but also punishes the poor in every state across India. We welcome and encourage the swift passage of the upcoming microfinance Bill through Parliament, which should ultimately supersede the AP Act. While the Bill must be passed at the earliest to avoid further damaging the lives of India’s poor, the report highlights provisions in the Bill and recent RBI circular on NBFC-MFIs that threaten to undermine the Bill’s intentions. Finally, it examines the important role of the private sector in contributing to the challenge of facilitating financial inclusion to India’s 450 million unbanked citizens.