BENGALURU: The state government is planning to formulate ‘Karnataka Microfinance Institutions (Regulation of Money Lending) Bill’ to rein in microfinance companies. This is in view of the increasing number of complaints accusing such companies of harassing those unable to clear loans taken from them.
Disclosing this to reporters here on Friday after a cabinet meeting, Law and Parliamentary Affairs Minister HK Patil said the Reserve Bank of India (RBI) and other central finance agencies are not able to control microfinance companies.
“We are tabling the Karnataka Microfinance Institutions (Regulation of Money Lending) Bill at a meeting convened by Chief Minister Siddaramaiah on Saturday,’’ Patil said.
The meeting will discuss measures to be taken to stop such lending companies from harassing borrowers, especially farmers, in rural areas, he said.
Asked if finance companies can’t be controlled under existing laws, Patil said they are not strong. Police have limited powers to handle such cases. “We have to plug the loopholes,’’ he added.He said the state government has taken the issue seriously and a special law is expected soon to control such lending companies.
Meanwhile, Home Minister G Parameshwara said many complaints have been received against microfinance companies from across the state.
Banks and other financial agencies have powers to recover loans. At the same time, there are laws to protect the interests of borrowers. But they are not effective. Steps will be taken to bring in an effective law, he said.