Existing law ineffective to deal with highhandedness of Microfinance firms: K’taka Minister
Bengaluru: Amid incidents of suicides due to alleged torture by the Microfinance institutions (MFIs), Karnataka Home Minister G. Parameshwara said on Friday that the existing law is not effective in dealing with the “highhandedness” of such companies in the state.
Addressing media in Bengaluru, Parameshwara stated, “Throughout the state, complaints have been made regarding the harassment by the MFIs. It has come to our knowledge that the currently existing laws are not effective.”
The Congress government will amend the law, he underlined.
Parameshwara further stated, “As per bank norms, there is a law for recovery of loans and their protection. We have got reports from our department that the laws are not effective and they are not stringent to curb the menace.”
“In future, there is a necessity to frame strict laws to regulate MFIs and the Congress-led government will act in the direction of framing laws in this regard. In between, regarding the ongoing harassment, we have instructed officials to take action,” he informed.
“What happens in recovery is, the people are given loans after taking undertakings from them. You all know that if you are getting a loan from the bank, they get many signatures. The purpose of getting those signatures won’t be known by the customers. That will be a commitment, and on that basis, the companies will go to the houses, conduct raids, seize the houses and take other actions The solution in this regard needs to be found under the law,” Parameshwara stated.
“Law Minister H.K. Patil has also taken note of the development and Chief Minister Siddaramaiah has also made the statement in this regard. In the coming days, the existing law will be amended. The Chief Minister has called a meeting. We will discuss the cases reported in the state and we will also discuss the lack of effective law to deal with the situation,” he stated.
The wife of a man who committed suicide sent her mangalsutra to Parameshwara on Thursday, demanding action against the staff of a microfinance company who allegedly drove her husband to take his own life.
Many women from the Haveri district had also sent their mangalsutra to Siddaramaiah urging him to act over “harassment” by MFIs.
Sources have confirmed that Siddaramaiah has called for a meeting on this issue on January 25 in Bengaluru.
Reports suggest that Deputy Commissioners’ offices across the state are flooded with petitions seeking government intervention to stop the harassment by microfinance companies.
Union Minister H. D. Kumaraswamy, Leader of the Opposition R. Ashoka, BJP State President B. Y. Vijayendra and former Karnataka Chief Minister and BJP MP Basavaraj Bommai had accused the Congress-led state government of losing control over MFIs, leading to widespread harassment of vulnerable citizens.