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In response to rising complaints of harassment by microfinance institutions, the Karnataka government is set to implement strict legal measures to protect borrowers. Chief Minister Siddaramaiah, after an emergency meeting with ministers, officials from the Reserve Bank of India (RBI), NABARD, and microfinance representatives, assured that decisive action would be taken against unlawful recovery practices.
Also Read: Karnataka government takes tough stance on microfinance harassment
Key measures include banning loan collections after 5 PM, prohibiting the involvement of rowdies or goons in recovery processes, and enforcing RBI’s interest rate guidelines. Additionally, a district-level helpline will be launched, allowing borrowers to report harassment, with police directed to act promptly.
Home Minister Dr. G Parameshwara, who was part of the drafting committee for the Microfinance Bill, emphasized the need for legal scrutiny before implementation. “We have looked into it more seriously. There were provisions which are kind of a link between the existing laws and the present law. This has to be law-tested. It should not get a stay in the court,” he stated. He added that the Chief Minister has tasked the Law Department with reviewing the bill to ensure its legal standing. “So, I think it will be decided in a day or two,” he said.
With these measures, the government aims to bring accountability to the microfinance sector while ensuring borrower protection from coercion and unfair lending practices.
