BENGALURU: The state government, which is pushing to bring microfinance companies under the ambit of law to rein them in, is hoping to get the nod from Governor Thaawarchand Gehlot soon.
Home Minister Dr G Parameshwara told the media on Tuesday that they have sent the draft of Karnataka Micro Finance (Prevention of Coercive Actions) Ordinance 2025 to the governor’s office. “He was not in Bengaluru and he is back in Raj Bhavan now. We are hoping to get the nod soon,’’ he said. The ordinance was sent to Raj Bhavan on Monday.
According to Parameshwara, the government has increased the punishment for violators to 10 years imprisonment and Rs 5 lakh penalty. “They should feel the heat of law. If we make a namesake law, it is of no use. That is why the imprisonment term and penalty have been increased,’’ he said.
Asked about the possibility of microfinance companies approaching courts against legislation, he said that was the reason the government took time. “When we initiated the draft, we had discussed about these companies going to court. Chief Minister Siddaramaiah had instructed the Law Department to take precautionary measures. We have kept all these issues in mind while preparing the draft,’’ he said.
Microfinance firms are accused of not following RBI guidelines while giving loans and harassing people who are unable to repay the loans. The government decided to bring in a law after several people died by suicide and many left their hometowns fearing harassment from microfinance companies.