Bengaluru: Karnataka Chief Minister Siddaramaiah on Saturday announced that a new stringent law will be enacted soon to rein in microfinancing firms which have been accused of running havoc in the lives of gullible borrowers across the state over the past few months.
Siddaramaiah on Saturday chaired a meeting with his cabinet colleagues, senior officials from the state government and RBI and representatives of microfinance institutions in the wake of a flurry of incidents of harassment to borrowers reporting from across the state.
"Realising the urgency of reigning in microfinance companies which have been harassing borrowers, the government has decided to enact a new law through an ordinance," he said. "The new law will ban forcible recovery of loans besides giving more powers to police including suo-moto registration of criminal cases against harassing finance companies," Siddaramaaih said.
The new law will also have appropriate provisions to regulate unregistered money lenders, he added.
"The state government cannot be a mute spectator to the harassment and coercive actions by the microfinancing companies. Our government will take all necessary measures to protect the poor borrowers," he said, calling upon borrowers to file complaints with the police without any hesitation in case they face harassment at the hands of the lenders.
All Deputy Commissioners and SPs have been instructed to open helplines for people facing harassment by lenders to file complaints besides registering cases on their own. "We have also told DCs and SPs to send stern warnings to lenders in this regard and also register suo-moto cases against them if the situation warranted," he added.
As per the RBI guidelines, lenders are barred from visiting the houses of borrowers after 5 PM and no services of third parties should be utilised for loan recovery. "We will ensure that these guidelines are strictly adhered to by lenders," the CM said.
Earlier in the meeting, representatives of microfinancing firms reportedly faced the wrath of the CM and the ministers for harassing borrowers. In reply, they claimed the firms that possess RBI licenses have not indulged in forceful recovery of loans and it was the work of the unlicensed lenders.
