Sun Jan 26 15:13:13 UTC 2025: ## Karnataka to Crack Down on Predatory Microfinance Companies

**Bengaluru, January 26, 2025** – The Karnataka state government is taking swift action to address widespread complaints of harassment by microfinance companies. Following numerous reports of harassment and even suicides linked to aggressive debt collection, the state cabinet will discuss a draft bill to regulate these companies at its next meeting on January 30th.

Chief Minister Siddaramaiah announced that a new helpline will be established within deputy commissioner offices to assist victims in filing complaints and promised stern action against offending companies. He reiterated his concerns about the dubious lending and recovery practices employed by some microfinance institutions, echoing sentiments expressed after a meeting with company representatives on Saturday.

The government has already decided to promulgate an ordinance, the Karnataka Microfinance Institutions (Regulation of Money Lending) Bill, following that meeting. Law and Parliamentary Affairs Minister H.K. Patil stated that a draft of the bill will be finalized within four days and presented to the cabinet. The draft is currently being reviewed by police officers to ensure effective enforcement. Discussions with other ministers are also underway. Minister Patil highlighted the concerning practice of outsourcing collections to individuals with criminal records.

Other cabinet ministers also voiced strong condemnation. Public Works Minister Satish Jarkiholi suggested handing the investigation over to the Criminal Investigation Department (CID), while Urban Development Minister Byrathi Suresh threatened criminal charges against those forcibly collecting debts from vulnerable populations. Cooperation Minister K.N. Rajanna indicated that the new legislation will address excessively high-interest rates, and Labour Minister Santosh Lad noted the unacceptable levels of blackmail and harassment reported to the police.

The government’s decisive response aims to protect vulnerable citizens from predatory lending practices and ensure fair treatment within the microfinance sector.

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