Karnataka Government to Enforce Stricter Regulations Against Microfinance Issues
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Synopsis
Karnataka's government, led by Chief Minister Siddaramaiah, is committed to tackling the issues caused by microfinance institutions. A high-level meeting resulted in plans for a stronger law to prevent harassment of borrowers and regulate coercive recovery practices.
Key Takeaways
- Karnataka plans to enact a stronger law against microfinance harassment.
- Police will have enhanced powers to act against violators.
- Severe penalties will be imposed for coercive lending practices.
- A team of senior officials will oversee legal revisions.
- Focus on protecting borrowers from inhumane treatment.
Bengaluru, Jan 30 (NationPress) The government of Karnataka convened a second high-level meeting on Thursday to address the challenges faced by citizens due to the oppressive behavior of microfinance institutions.
This meeting, led by Chief Minister Siddaramaiah, concluded with a commitment to reassess the proposed Ordinance and to develop a more robust law.
“We have resolved to examine the details of the ordinance aimed at curbing the harassment by microfinance entities and to expedite the creation of a stronger law. A team consisting of senior officials from the Law and Finance Departments will be assembled to facilitate this process,” stated Siddaramaiah.
He emphasized that the law must be entirely constitutional and devoid of any gaps, mentioning that a comprehensive statute is in the works to shield borrowers from harassment and to regulate coercive recovery practices by lenders.
“The new law will empower police with enhanced authority. We will appoint ombudsmen and impose severe penalties, including non-bailable offenses, on those involved in inhumane and coercive loan recovery methods,” the Chief Minister added.
He also assured that stringent measures are being implemented to curb harassment by unregistered moneylenders.
“Our current legal framework includes provisions to manage harassment from microfinance institutions. The pressing issue is why these provisions are not being effectively enforced. Police must act on their own initiative and file cases without waiting for formal complaints,” he remarked.
Numerous incidents of suicide and harassment have been reported statewide due to alleged maltreatment by microfinance firms.
A tragic incident involved a female teacher who took her own life by jumping into a river, reportedly due to harassment from microfinance staff in Karnataka's Davanagere district. Officials confirmed that her body was discovered on Tuesday.
The victim has been identified as Pushpalatha, who had been missing since January 26.
In another case, a man allegedly suffered a fatal heart attack due to harassment from microfinance employees in Tumakuru district. The deceased has been identified as Syed Samiulla.
After his death, Samiulla’s wife, Tabassum Banu, reached out to the authorities for assistance, alleging that the staffers are now targeting her, and this treatment could lead her and her children to consider suicide.
A woman in Mysuru district, the native area of Chief Minister Siddaramaiah, also died by suicide out of fear of harassment by microfinance staff. This incident occurred in Ambale village, with the deceased identified as 53-year-old Jayasheela. Police reported on January 27 that she ended her life by ingesting poisonous tablets.
Previously, Chief Minister Siddaramaiah had conducted a high-level meeting addressing the challenges posed by microfinance institutions.
At a press conference at Vidhana Soudha following the meeting on January 25, the Chief Minister affirmed the government's dedication to safeguarding the interests of borrowers engaged with microfinance institutions.
