<p>Taking note of suicides due to harassment from private moneylenders across Karnataka, the state government recently passed the Karnataka Micro Loan and Small Loan (Prevention of Coercive Actions) Ordinance, 2025. In an interview with DH’s N B Hombal, Minister of Law and Parliamentary Affairs, Legislation and Tourism H K Patil, sheds light on the ordinance and its impact.</p>.<p><strong>It has been 11 days since the ordinance was promulgated. Have there been any changes on the ground?</strong></p>.<p>Yes, the impact is visible. Police have begun conducting raids on errant lenders. In Gadag alone, Rs 5 crore cash, 600 illegal bonds and around 500 cheques were seized from lenders who tried to harass people. </p>.<p><strong>How is the government going to implement the clause that asks borrowers not to repay loans taken from unregistered lenders?</strong></p>.<p>If the victim files a complaint with the police alleging harassment, the police will conduct raids on such lenders, and after thorough investigations, the loan discharge process will commence.</p>.<p>Non-banking financial companies (NBFCs) and conventional banks are not covered under the ordinance, which means they need not register with the district administration. </p>.<p>Though this ordinance mentions only illegal moneylenders and private unregistered moneylending institutions, the message is clear that bad practices of loan recovery will not be tolerated by the state government. This message is for everyone.</p>.<p><strong>The state already had three specific laws on private money lending. What is new in this ordinance?</strong></p>.<p>The three existing laws were almost toothless. Under these laws, harassment was not a cognisable offence. As a result, there was no fear of the law. The ordinance ensures that a borrower does not undergo harassment while ensuring that genuine lenders are not targeted either.</p>.<p><strong>How is the government working to bring more people under mainstream banking coverage?</strong></p>.<p>Our country’s banking system, institutional system, financial company system all put together are able to cover 60 per cent to 65 per cent of the population. The remaining 30 per cent to 35 per cent population is still dependent on an unconventional financial system. We must accept that we have failed to that extent. The state government is trying its best to bring more people into an organised financial system, in a phased manner.</p>
<p>Taking note of suicides due to harassment from private moneylenders across Karnataka, the state government recently passed the Karnataka Micro Loan and Small Loan (Prevention of Coercive Actions) Ordinance, 2025. In an interview with DH’s N B Hombal, Minister of Law and Parliamentary Affairs, Legislation and Tourism H K Patil, sheds light on the ordinance and its impact.</p>.<p><strong>It has been 11 days since the ordinance was promulgated. Have there been any changes on the ground?</strong></p>.<p>Yes, the impact is visible. Police have begun conducting raids on errant lenders. In Gadag alone, Rs 5 crore cash, 600 illegal bonds and around 500 cheques were seized from lenders who tried to harass people. </p>.<p><strong>How is the government going to implement the clause that asks borrowers not to repay loans taken from unregistered lenders?</strong></p>.<p>If the victim files a complaint with the police alleging harassment, the police will conduct raids on such lenders, and after thorough investigations, the loan discharge process will commence.</p>.<p>Non-banking financial companies (NBFCs) and conventional banks are not covered under the ordinance, which means they need not register with the district administration. </p>.<p>Though this ordinance mentions only illegal moneylenders and private unregistered moneylending institutions, the message is clear that bad practices of loan recovery will not be tolerated by the state government. This message is for everyone.</p>.<p><strong>The state already had three specific laws on private money lending. What is new in this ordinance?</strong></p>.<p>The three existing laws were almost toothless. Under these laws, harassment was not a cognisable offence. As a result, there was no fear of the law. The ordinance ensures that a borrower does not undergo harassment while ensuring that genuine lenders are not targeted either.</p>.<p><strong>How is the government working to bring more people under mainstream banking coverage?</strong></p>.<p>Our country’s banking system, institutional system, financial company system all put together are able to cover 60 per cent to 65 per cent of the population. The remaining 30 per cent to 35 per cent population is still dependent on an unconventional financial system. We must accept that we have failed to that extent. The state government is trying its best to bring more people into an organised financial system, in a phased manner.</p>