<p>Bengaluru: The Siddaramaiah administration on Wednesday promulgated an ordinance that proposes up to 10 years imprisonment and Rs 5 lakh penalty for <a href="https://www.deccanherald.com/tags/microfinance">microfinance</a> companies that cause “undue hardship” to borrowers. </p><p>The Karnataka Micro Loan and Small Loan (Prevention of Coercive Actions) Ordinance was notified after Governor Thaawarchand Gehlot signed off on it. </p><p>Gehlot had, on February 8, returned the ordinance to the government flagging regulatory excesses. </p>.<p>While giving his assent Wednesday, Gehlot asked the government to ensure that the law is not ‘misinterpreted’ or ‘misutilised’ to harass “legal, registered and regulated” banks.</p><p>With the ordinance notified, all microfinance institutions, money-lending agencies and lenders have to register with deputy commissioners within 30 days. </p><p>Prohibiting 'coercive’ loan recovery methods, the government will act against microfinance companies or lenders if they use pressure, violence, insults, private/outsourced agencies, persons with a criminal background and so on.</p>.Karnataka govt sends microfinance ordinance back to Governor Gehlot with explanations.<p>Under the law, the government has proposed an ombudsman to act as a mediator to settle loan disputes. </p><p>Also, the government has given officers ranked at the level of Deputy Superintendents of Police powers to file cases suo motu. </p><p>The law further bars microfinance companies and money-lenders from seeking securities (pawns, pledges etc) from borrowers. </p><p>Siddaramaiah was bullish about the ordinance in the wake of suicides caused by usury and predatory loan recovery methods, which led to widespread public anger. </p>.Karnataka govt sends microfinance ordinance back to Governor Gehlot with explanations.<p>“Even though the ordinance has the best of intentions, the legal and social impact needs to be deliberated in detail,” Gehlot wrote on the file approving the law.</p><p><strong>'No repayment' clause</strong></p><p>Farmers, women, agricultural labourers, footpath vendors, dairy workers, migrant workers and "people who are disadvantaged" need not repay loans, including interest, borrowed from "unregistered and unlicensed" microfinance companies, money-lending agencies or lenders as per Section 14 of the ordinance.</p><p>"No civil court shall entertain any suit or proceeding against the borrower for the recovery of any amount of such loan including interest," the ordinance states. </p>.Karnataka microfin ordinance proposes up to 10-year jail for violation, Governor's approval pending .<p>"If all the pending loans with interest as on date is discharged," Gehlot warned, "the lawful and genuine lenders may face trouble." </p><p>Gehlot has asked the government to "rethink" on this aspect, stating that preventing any person from fighting for one's rights and legal remedies may violate Constitution Articles 19 and 32. </p>
<p>Bengaluru: The Siddaramaiah administration on Wednesday promulgated an ordinance that proposes up to 10 years imprisonment and Rs 5 lakh penalty for <a href="https://www.deccanherald.com/tags/microfinance">microfinance</a> companies that cause “undue hardship” to borrowers. </p><p>The Karnataka Micro Loan and Small Loan (Prevention of Coercive Actions) Ordinance was notified after Governor Thaawarchand Gehlot signed off on it. </p><p>Gehlot had, on February 8, returned the ordinance to the government flagging regulatory excesses. </p>.<p>While giving his assent Wednesday, Gehlot asked the government to ensure that the law is not ‘misinterpreted’ or ‘misutilised’ to harass “legal, registered and regulated” banks.</p><p>With the ordinance notified, all microfinance institutions, money-lending agencies and lenders have to register with deputy commissioners within 30 days. </p><p>Prohibiting 'coercive’ loan recovery methods, the government will act against microfinance companies or lenders if they use pressure, violence, insults, private/outsourced agencies, persons with a criminal background and so on.</p>.Karnataka govt sends microfinance ordinance back to Governor Gehlot with explanations.<p>Under the law, the government has proposed an ombudsman to act as a mediator to settle loan disputes. </p><p>Also, the government has given officers ranked at the level of Deputy Superintendents of Police powers to file cases suo motu. </p><p>The law further bars microfinance companies and money-lenders from seeking securities (pawns, pledges etc) from borrowers. </p><p>Siddaramaiah was bullish about the ordinance in the wake of suicides caused by usury and predatory loan recovery methods, which led to widespread public anger. </p>.Karnataka govt sends microfinance ordinance back to Governor Gehlot with explanations.<p>“Even though the ordinance has the best of intentions, the legal and social impact needs to be deliberated in detail,” Gehlot wrote on the file approving the law.</p><p><strong>'No repayment' clause</strong></p><p>Farmers, women, agricultural labourers, footpath vendors, dairy workers, migrant workers and "people who are disadvantaged" need not repay loans, including interest, borrowed from "unregistered and unlicensed" microfinance companies, money-lending agencies or lenders as per Section 14 of the ordinance.</p><p>"No civil court shall entertain any suit or proceeding against the borrower for the recovery of any amount of such loan including interest," the ordinance states. </p>.Karnataka microfin ordinance proposes up to 10-year jail for violation, Governor's approval pending .<p>"If all the pending loans with interest as on date is discharged," Gehlot warned, "the lawful and genuine lenders may face trouble." </p><p>Gehlot has asked the government to "rethink" on this aspect, stating that preventing any person from fighting for one's rights and legal remedies may violate Constitution Articles 19 and 32. </p>
