BENGALURU: The Karnataka government on Monday re-submitted the Karnataka Micro Loan and Small Loan (Prevention of Coercive Actions) Ordinance, 2025, to Governor Thaawarchand Gehlot as it was, with a reply defending that it does not curb one’s basic right, neglect the interest of lenders nor does it restrict loan recovery. The ordinance, with no changes but with clarifications on the issues raised by the governor, was resubmitted with an appeal to him to reconsider and issue the order, official sources in the law department confirmed.
The governor had on Friday returned the ordinance seeking clarifications on various issues, including punishment and penalty for contravention of the law. “Provision has been made for imposing penalty for contravention of Section 8 of the ordinance for punishment for a term which may extend to 10 years, and a fine extending up to Rs 5 lakh and offences under this ordinance are non-bailable.
When the maximum amount of loan that can be given is Rs 3 lakh, the proposed fine of Rs 5 lakh itself is against natural principles. It is observed that the term of punishment proposed is also disproportionate, compared to the provisions already available in other laws for similar offences. It is also against the principle of natural justice,” he remarked.
He had also said the ordinance benefits only borrowers and affects lenders while suggesting that the bill could be tabled in the budget session commencing next month for deliberations in legislature.
Defending the ordinance, Law Minister HK Patil had said on Friday that it does not curb one’s basic right and has not neglected the interest of lenders, nor restricted loan recovery. Unregistered or unlicensed lenders cannot give loans or levy compound interest or penalty interest. Such loans cannot be given under law, and such cases cannot be taken up in courts too, he had clarified. “If such acts of recovering loans by unregistered agencies is considered a basic right, then it means the Constitution is safeguarding people who are involved in such illegal acts,’’ he said.
Patil defended the penalty of Rs 5 lakh, to which Governor 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.
His reply has been incorporated as a clarification to the governor in the ordinance re-submitted on Monday.