Home Minister G. Parameshwara said on Saturday that the government would address the issues flagged by Governor Thaawarchand Gehlot regarding Karnataka Micro Finance (Prevention of Coercive Actions) Ordinance, 2025, and send it back to him for assent.
Mr. Gehlot had returned the Ordinance to the government, flagging several provisions as problematic. Following cases reported from across Karnataka of Microfinance Institutions (MFIs) allegedly harassing defaulters, the Karnataka government had drafted the Ordinance with some stringent norms and sent it to the Governor for assent.
“The Governor has returned it with certain observations, and the government will reply to them and send it again to him,” Dr. Parameshwara told reporters here on Saturday, adding that it should not be read as “rejection”.
Among other things, Mr. Gehlot had flagged “excesses” in the regulatory mechanism proposed. Citing penal provisions, including jail term of up to 10 years and fine of ₹5 lakh for violations, the Governor observed that they were excessive. When the maximum amount of loan that can be lent is ₹3 lakh, the proposed fine of ₹5 lakh is against principles of natural justice, he said. The Governor also suggested that existing laws could be used effectively to curb MFI issues.
Responding to the Governor’s observation regarding a higher fine, the Home Minister said: “The fine is imposed on those who commit wrong, not everyone. I don’t know in what context he has made the observations. We have made such provisions in the larger interest so that it becomes a deterrent.”
