Synopsis
The Karnataka government is prepared to adopt suggestions from Governor Thaawarchand Gehlot regarding an Ordinance aimed at regulating microfinancing institutions to prevent harassment and suicides in rural areas.Key Takeaways
- Karnataka government supports Governor's suggestions on MFIs.
- Ordinance aims to combat microfinancing harassment.
- Increased penalties to Rs 5 lakh for offenders.
- MFIN urges loan recipients to seek help.
- Guidelines established to prevent abusive practices.
Bengaluru, Feb 5 (NationPress) The Congress-led Karnataka government announced its willingness to integrate suggestions proposed by Governor Thaawarchand Gehlot concerning the Ordinance established by the state to address the oppressive practices of microfinancing institutions (MFIs) which have led to tragic outcomes such as suicides and abandonment in rural communities.
During a press briefing, Home Minister G. Parameshwara stated: "The Governor is anticipated to reach a decision regarding the Ordinance on MFIs after conferring with legal experts. We expect this to occur today. Currently, there is no indication that the Governor has requested changes to the Ordinance. If any amendments are proposed, they will be implemented promptly, and the Ordinance will be submitted back for his endorsement.
"The penalty has been raised to Rs 5 lakh to ensure that offenders experience the full weight of the law. We cannot simply introduce legislation for appearance's sake; to effect genuine change, we have increased both the imprisonment terms and the penalty amounts. The goal is to establish a robust deterrent against suicide and harassment incidents."
The Karnataka Home Minister further elaborated: "The postponement in issuing the Ordinance was intentional to prevent microfinance companies from having a chance to contest the law in court, which could hinder the government's efforts. We thoroughly discussed the issue, and the Chief Minister instructed the Law Department to take all necessary precautions.
“The delay was executed with this consideration in mind. The draft has been meticulously prepared, accounting for all elements. We are confident that the government will not encounter any obstacles. The draft has been finalized as needed."
Meanwhile, in light of the ongoing discourse about harassment leading to severe repercussions within the state, The Microfinance Industry Network (MFIN) has placed advertisements in newspapers listing the names of registered MFIs authorized by the Reserve Bank of India (RBI) operating in the state.
The MFIN has urged individuals who have taken loans to reach out to their respective MFIs for any complaints, and if unsatisfied, they can dial the MFIN toll-free number (1800 102 1080). Additionally, the MFIN has requested the public not to panic due to the news surrounding microfinance companies.
The MFIN has published guidelines and the framework under which MFIs function according to RBI directives, which prohibit any coercive practices, threats, abusive behavior, or harassment towards customers' relatives.
A series of distressing incidents involving suicides and abandonment have been reported throughout the state, prompting the government to enact an Ordinance to regulate MFIs that are neither overseen by the RBI nor operate with valid licenses.
