BENGALURU: Law Minister HK Patil and Revenue Minister Krishna Byre Gowda on Saturday held a meeting with senior officers to draft a new law aimed at curbing the excesses of microfinance institutions.
According to a statement from the revenue minister’s office, during the meeting, several key measures, including an online portal to track and update details on loan disbursements, ensuring transparency and preventing over-lending that traps the poor in debt cycles, were proposed.
The ministers proposed that the entire loan application and disbursement process should be managed online, interest rates must be transparent and in compliance with RBI regulations, microfinance companies must be mandatorily registered in the state, the government can cancel or suspend their registration at any time, and an ombudsman should be appointed in each district to oversee microfinance operations.
They also proposed that microfinance companies should not be allowed to hold any assets or valuables as collateral for loans, and there should be strict restrictions against using intermediaries to harass borrowers who default on repayments.
The officials have been instructed to incorporate these key aspects into the legal framework, the note stated.