Governor Returns Ordinance Asking State Government to Deliberate in Legislature

Bengaluru: After going through the State Government submitted Karnataka Micro Loan and Small Loan (Prevention of Coercive Actions) Ordinance, 2025, Governor Thaawarchand Gehlot on Friday returned the Ordinance giving ample reasons for him to return it to the State Government and asked the State Government to re-submit with clarifications sought by him.

The State Government promulgated the Ordinance to address the issue of harassment and to prevent unlawful and forceful actions of a few anti-social elements of the society. In recent days, Karnataka reported several cases of harassment to borrowers by lenders and fearing lenders, many alleged to have taken drastic steps to end their lives.

He asked the State Government not to be in a hurry to bring the Ordinance into force and suggested an effective enactment in the interest of the affected people and to protect their rights.

While returning the Ordinance back to the State Government, Governor found the State Government promulgated Ordinance will benefit the borrower section of the society and affect lenders who are also part of the same society. Governor wanted the issue to be deliberated in detail in the State legislature in the ensuing budget session next month.

Another reason for the return of the Ordinance by the Governor was that he found no proper advice with statistical or legal advice or explanation as to how far this ordinance will benefit in curbing harassment of borrowers at the hands of lenders.

In the proposed Ordinance, Governor found that the ordinance submitted to him by the State Government will not apply to any banking or non-banking finance companies registered with Reserve Bank of India (RBI) and observed many lending agencies will be left out while the ordinance applies to only to unregistered and unlicensed lending agencies.

Governor stated “It is better to enforce the existing provisions of the law to protect the borrowers from unlawful harassment from the agencies including with the help of RBI guidelines” and he pointed out Police and concerned departments already have provisions under the Karnataka Money Lenders Act, 1961, Negotiable Instruments Act, 1881, The Karnataka Debt Relief Act, 1976 and Indian Penal Code including Karnataka Police Act to deal with harassment to borrowers from lenders.