Karnataka's Bold Move on Microfinance: New Laws to Protect Borrowers

Karnataka Chief Minister Siddaramaiah announces plans to amend laws governing the money lending sector following public outrage over borrower harassment by microfinance firms. The state aims to introduce legislation to safeguard genuine borrowers, regulate interest rates, and enforce strict law adherence by these companies.

In response to rising concerns about borrower harassment, Karnataka Chief Minister Siddaramaiah declared the state's intention to amend existing money lending laws. New legislation aims to protect borrowers from malpractices associated with the microfinance sector, including excessive interest rates and unlawful recovery methods.

During an emergency meeting attended by senior officials and representatives from microfinance companies, Siddaramaiah highlighted the need for strict adherence to RBI guidelines. The proposed laws will regulate the activities of microfinance institutions and ensure fair treatment of borrowers.

To address the issues, a helpline will be established for complaints, strict actions will follow for rule violations, and consultations with other states will inform law formation. The state will also urge the Centre to implement national policies to safeguard borrowers.

(With inputs from agencies.)