Will amend law to rein in microfinance companies: Karnataka CM Siddaramaiah

Karnataka Chief Minister Siddaramaiah on Saturday said the state government would amend the existing laws related to money lending business and introduce new legislation to protect the interest of the genuine borrowers. In the wake public outrage against the alleged harassment by micro-finance companies to recover money from borrowers, Siddaramaiah chaired an emergency meeting with his deputy D K Shivakumar, Revenue Minister Krishna Byre Gowda, Home Minister G Parameshwara, Law Minister H K Patil, senior government and top police officials.

Representatives of the microfinance companies association, regional officers of the Reserve Bank of India and NABARD officials were also present.



Later, briefing reporters, the CM said he took the opinion of the microfinance companies as well as the RBI officials.

"After taking their view, we told them that we won't say not to give loan or do not recover money from borrowers but while recovering money you should not torture and harass people," Siddaramaiah said.

While recovering money, RBI guidelines should be followed by the micro-finance institutions. The central bank should also monitor the violations of these guidelines, he added.

"We are going to amend the existing laws and also bring new legislation to protect the interest of the genuine borrowers of the micro finance institution and other private money lenders," he added. The Chief Minister added he told the companies not to charge interest more than the prescribed rules.


"After 5 PM, no one should go for recovering money. We have opposed outsourcing the recovery work," he said.

"What happens is, it is outsourced and rowdies are roped in. This should not be done. We will take stringent action against violation of rules for recovering money," Siddaramaiah warned.

The meeting was convened after many people allegedly died by suicide, families fled their homes and women staged protests against the harassemnet by microfinance companies across the state.

The menace is more prevalent in the rural areas.