Sat Feb 15 19:02:10 UTC 2025: **Karnataka Cracks Down on Illegal Microfinance Institutions**

BENGALURU, February 16, 2025 – Karnataka Chief Minister Siddaramaiah has ordered a crackdown on illegal microfinance institutions (MFIs) exploiting vulnerable populations with exorbitant interest rates and coercive loan recovery tactics. In a videoconference with district officials on Saturday, Mr. Siddaramaiah instructed Deputy Commissioners and Superintendents of Police to shut down all unregistered MFIs operating within the state.

The directive comes following the implementation of the Karnataka Micro Loan and Small Loan (Prevention of Coercive Actions) Ordinance, 2025, aimed at curbing predatory lending practices. The Chief Minister stressed the importance of enforcing the ordinance, halting the hiring of agents and rowdies for loan recovery, and registering criminal cases against MFIs involved in forceful collection methods. He emphasized the need to protect economically vulnerable individuals from usurious interest rates and harassment.

Mr. Siddaramaiah noted a decrease in harassment cases since the ordinance’s enactment. Licensed MFIs, he added, must adhere to Reserve Bank of India guidelines. The meeting was attended by Law and Parliamentary Affairs Minister H.K. Patil and senior officials.

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