BENGALURU: Defending the Karnataka Micro Finance (Prevention of Coercive Actions) Ordinance 2025 issued by the state government, Law Minister HK Patil on Friday said it does not curb one’s basic right and it has not neglected the interest of lenders, nor restricted loan recovery. He, however, said that the ordinance will be presented in the Houses and opinion of legislators will be taken before a strong law is framed.
Patil said unregistered or unlicensed lenders cannot give loan or levy compound interest or penalty interest. Such loans cannot be given under law, and such cases cannot be taken up in courts too.
“If such acts of recovering loan by unregistered agencies is considered a basic right, then it means Constitution is safeguarding people who are involved in such illegal acts. We are safeguarding Constitution. Nowhere have we mentioned that registered agencies cannot give or recover a loan. Our ordinance is against those unregistered microfinance institutions that are harassing borrowers,’’ he said.
Patil defended the penalty of Rs 5 lakh, to which Governor Thaawarchand Gehlot has objected. He said the penalty amount is not based on the loan amount given by lenders, but for the pressure and harassment they subject their borrowers to. He said it has been discussed at various levels, including Chief Minister Siddaramaiah, before framing the ordinance. The ordinance was considered an emergency to stop harassment of people and hence it was issued.
Patil said this is not against natural justice. “We have gone into the specifics and brought it under the ambit of law,” he said, adding that it is not restricted to microfinance alone. This will not have any impact on self-help groups who take loan. Existing laws do not have safeguards for people in such cases. “We want to protect the lower strata of people through this law,’’ he said.