Karnataka Makes Aggressive Loan Recovery A Non-Bailable Offense

New Delhi, Jan 31 (KNN) The Karnataka state cabinet has approved a landmark ordinance that would make aggressive loan recovery practices by microfinance companies and non-banking financial institutions a non-bailable offense.

The measure comes in response to a wave of reported suicides and harassment incidents across the state, allegedly stemming from aggressive debt collection methods employed by these financial institutions.

Chief Minister Siddaramaiah announced the measure following a cabinet meeting on Thursday, emphasising the government's commitment to protecting borrowers from predatory practices.

The ordinance, which awaits Governor Thaawar Chand Gehlot's approval, includes provisions for the establishment of an ombudsman and grants enhanced powers to law enforcement agencies.

Notably, police will be authorised to initiate suo motu investigations against microfinance companies even before receiving formal complaints from affected borrowers.

The state government plans to transform this temporary measure into permanent legislation during the upcoming budget session in March.

This move represents one of the strongest regulatory actions taken against aggressive loan recovery practices in India's microfinance sector, reflecting growing concerns about the impact of predatory lending on vulnerable borrowers.

(KNN Bureau)