Karnataka Governor Rejects Microfinance Regulation Ordinance

Governor Thaawarchand Gehlot rejected the Karnataka Micro Finance Ordinance 2025, aimed at regulating microfinance to curb predatory recovery methods. The ordinance included penal measures, but the governor argued it would harm lawful lenders and infringe on rights. He suggested strengthening existing laws instead.

In a significant development, Karnataka Governor Thaawarchand Gehlot has turned down the proposed Micro Finance (Prevention of Coercive Actions) Ordinance 2025, citing concerns over its potential impact on lawful lenders and their rights. The ordinance aimed to regulate microfinance practices in the state.

The Siddaramaiah-led government had proposed the ordinance following a series of suicides linked to predatory loan recovery methods. It included stringent measures such as a ten-year imprisonment and a Rs five lakh fine for violators. However, the governor highlighted that such drastic measures could harm genuine lending practices and encroach on fundamental rights.

Gehlot emphasized that existing legal frameworks, like the Karnataka Money Lenders Act and Indian Penal Code, are sufficient to tackle these issues if enforced efficiently. He advised a thorough legislative discussion during the upcoming budget session to ensure effective regulation without compromising lenders' rights.

(With inputs from agencies.)