Chief Minister Siddaramaiah pulls up microfinance firms over illegal loan recovery tactics

Taking exception to this, ministers Krishna Byre Gowda, HK Patil and DK Shivakumar said those who had licences also harassed borrowers.
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BENGALURU: Chief Minister Siddaramaiah on Saturday took the representatives of microfinance companies to task for recovering loans through illegal means.

At a high-level meeting here, Siddaramaiah also took RBI officials to task for not acting against the microfinance companies for harassing people, especially farmers, for not clearing their loans. He sought to know what action they have taken to cancel the licences of microfinance companies which had extended loans in violation of RBI rules and regulations.

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Slamming the representatives of microfinance companies for using goons to recover loans, he questioned them whether they had taken permission from courts to seal the houses of borrowers.

“Did you explain the terms and conditions of the RBI to borrowers in their native language? Why did you give additional loans to the same borrowers without considering their repayment capacity? Why is Aadhaar KYC not done before giving loans? You are giving loans to the same borrowers over and again to boost your business. When you are unable to recover loans, you resort to illegal actions. Our government will not tolerate this,” he warned them.

He said, “Your records show that the same borrower has taken loans by giving different ID cards. What system are you following to prevent this?”

The representatives said that the companies, which had obtained RBI licences, did not resort to recovery of loans through illegal means. Only those without licences harassed borrowers.

Taking exception to this, ministers Krishna Byre Gowda, HK Patil and DK Shivakumar said those who had licences also harassed borrowers.

“We have received a report in this regard. To safeguard the interests of poor borrowers, action should be taken against the MDs of microfinance companies that violated the rules,” the ministers said.

Referring to the alleged high-handedness against women and elderly people, Siddaramaiah said he would not tolerate this and warned that stringent action would be taken against the errant companies.

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