‘Microfinance loans don't come under Debt Act’

‘Microfinance loans don't come under Debt Act’

The loans borrowed from microfinance do not come under Karnataka Debt Relief Act, 2018.

All those who have availed loan from microfinance should repay the loans, the industry associations for Microfinance - Association of Karnataka Microfinance Institutions (AKMi), Microfinance Institutions Network (MFIN) and Sa-Dhan, have clarified.

Briefing reporters, AKMi Secretary Shanthakumar said that the loan repayment in Dakshina Kannada was 99%. However, owing to the statements issued by a few individuals, the repayment has come down to 60%, he added.

In Dakshina Kannada alone, there are two lakh families that have utilised Microfinance service and close to Rs 500 crore have been lent by these institutions to the people.

In consultation with deputy commissioner, AKMi has agreed to open a grievance redressal helpline for people with confusions in repayment of loans and other issues related to loans taken from Microfinance Institutions, he added.

The toll free helpline numbers are 0824-2499632 and 7619508496 will be operational from December 16.

He said there was a dedicated grievance redressal mechanism in place for Microfinance clients as prescribed by the RBI. Every loan card has grievance redressal cell contact details. In case grievances are not addressed within 15 days, clients can contact industry associations AKMi, Sa-Dhan or MFIN. If the grievance is not redressed within 30 days, a client can approach the Banking Ombudsman of RBI, Shanthakumar said.

In addition, Mangaluru will also shortly have a dedicated District Level Grievance Redressal Mechanism which will ensure easy access to clients to raise their issues regarding loans, processes, repayments, over-indebtedness or any other grievance, he added.