BENGALURU: A day after Governor Thaawar Chand Gehlot rejected Karnataka Micro Finance (Prevention of Coercive Actions) Ordinance 2025, state government said it would address his concerns, rework and resend the proposal for approval within a day or two.
Gehlot raised concerns over potential regulatory excesses and termed the proposed penal provisions – up to 10 years of imprisonment and Rs 5 lakh fine – disproportionate.
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He also suggested that state government introduce a comprehensive law in the upcoming budget session rather than rushing an ordinance.
Home minister G Parameshwara, responding to governor’s observations, said, “He has made suggestions to take it up at upcoming legislature session beginning March 3 but we wanted to put a law in place urgently, as reports of suicides and harassment cases due to microfinance lending are increasing daily.”
Parameshwara defended the stringent penalties, arguing they serve as a deterrent. “The fine is imposed on those who commit wrong. I don’t know in what context the governor made these observations, but our intent is to curb harassment in the larger public interest,” he said.
Gehlot, while rejecting the ordinance, had pointed out that the maximum loan amount under microfinance schemes is Rs 3 lakh, making a Rs 5 lakh fine excessive.
He also suggested that existing legal provisions under Karnataka Money-Lenders Act, 1961, Negotiable Instruments Act, 1881, Karnataka Debt Relief Act, 1976 and Karnataka Police Act already empower the authorities to curb coercive recovery practices. He stressed that better enforcement of these laws could regulate the sector more effectively.
Parameshwara acknowledged differences in approach but emphasised the need for a dedicated law.
Karnataka government is now set to address the governor’s concerns and resubmit the ordinance, keeping its objective of preventing borrower harassment intact.
