Governor Returns Ordinance: Microfinance Controversy Grows in Karnataka

The Governor of Karnataka returned an ordinance meant to curb harassment from microfinance institutions, citing excessive penalties. The ordinance proposed strict punishments amidst rising suicides related to predatory loan practices. The state government plans to revise and resubmit the ordinance addressing the Governor's observations.

Tension is mounting in Karnataka as Governor Thaawarchand Gehlot returns an ordinance aimed at protecting borrowers from coercive microfinance institutions, labeling it a case of regulatory excess.

The ordinance, called the Karnataka Micro Finance (Prevention of Coercive Actions) Ordinance 2025, proposes severe penalties, including up to ten years of imprisonment and fines reaching Rs five lakh, to combat the rise in suicides linked to aggressive loan recovery tactics.

The government, led by Home Minister G Parameshwara, plans to address the Governor's observations and resubmit the ordinance, emphasizing the need for laws that serve as a deterrent to unethical lending practices.

(With inputs from agencies.)