Karnataka Governor Rejects Microfinance Ordinance, Cites Injustice To Lenders

Governor Thaawarchand Gehlot on Friday rejected Karnataka Micro Finance (Prevention of Coercive Actions) Ordinance 2025, stating that in its current form, the lenders, who are also part of the society, are being done a great injustice. Siddaramaiah-led Congress government had proposed to regulate microfinance in response to a spate of suicides and multiple complaints from various parts of the state against predatory loan recovery methods used by microfinance firms.

Earlier in the day, the Chief Minister's Office (CMO) said, the governor cited several reasons rejecting the ordinance.

Aimed at protecting borrowers from harassment by microfinance institutions (MFIs), the Karnataka government drafted the ordinance with penal provisions, including a jail term up to 10 years, and fine of Rs five lakh for violation.