Karnataka govt sends microfin ordinance back to Guv with explanations
Bengaluru, Feb 10 (PTI): The Karnataka government on Monday said it has re-sent the ordinance aimed at protecting borrowers from harassment by microfinance institutions (MFIs) to the Governor once again for his assent, along with the explanations he had sought.
Governor Thaawarchand Gehlot had recently returned the ordinance to the government, citing regulatory excesses.
The Karnataka Micro Finance (Prevention of Coercive Actions) Ordinance 2025 includes penal provisions such as a jail term of up to ten years and a fine of up to Rs 5 lakh for violations.
The government decided to promulgate the ordinance in response to a spate of suicides and multiple complaints from various parts of the state against predatory loan recovery methods adopted by microfinance firms.
"The ordinance on microfinance has been sent back to the Governor along with all the explanations sought by him," the Chief Minister's Office said.
The Governor, while returning the ordinance to the government, had noted the state government was proposing to discharge all pending loans, including interest, once the ordinance comes into effect, and that no civil court shall entertain any proceedings against borrowers.
"But if all pending loans with interest are discharged, lawful and genuine lenders may face difficulties. Furthermore, they will have no legal remedy to recover their dues," the Governor stated.
He emphasised that, as a principle of natural justice, every person has the right to seek legal remedies for their grievances.
"Preventing individuals from fighting for their rights may lead to a violation of fundamental rights guaranteed under Articles 19 and 32 of the Constitution of India," Gehlot added.
He also said this goes against the principles of lending followed by government banks.
Further, he noted that the proposed ordinance could negatively impact the state's business prospects by affecting self-help groups, which play a crucial role in uplifting the most vulnerable sections of society.
The ordinance aims to regulate only unregistered and unlicensed lending agencies, he said. However, he emphasized that some of these lenders, who are genuine individuals with a conscience, often serve as a lifeline for those overlooked by the traditional credit system.
"When managed responsibly, they expand access to credit and contribute to the robust growth of the financial sector," Gehlot said.
The Governor said that the punishment provisions—10 years of imprisonment and a Rs 5 lakh fine—are disproportionate compared to those in existing laws for similar offences.
He further noted that, given that the maximum loan amount that can be sanctioned is Rs 3 lakh, imposing a Rs 5 lakh fine goes against natural justice.
The Governor pointed out that to curb forceful and unlawful activities by unscrupulous lending agencies, the state government, through its police and relevant departments, already has legal provisions under the Karnataka Money Lenders Act, 1961, the Negotiable Instruments Act, 1881, the Karnataka Debt Relief Act, 1976, the Indian Penal Code, and the Karnataka Police Act to address such violations.
Gehlot said that effective enforcement of existing laws by the authorities would be a more efficient way to regulate the issue.
He also advised that, since the Budget Session is set to commence next month, instead of rushing through an ordinance, the state government should deliberate on the issue in detail and introduce a well-structured law in the interest of the affected people and to protect their rights.
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Cong takes swipe at PM over India not being part of US-led 'Pax Silica' grouping
New Delh (PTI) The Congress on Saturday said it is perhaps not very surprising that India is not part of a US-led strategic initiative to build a secure silicon supply chain, given the "sharp downturn" in the Trump-Modi ties, and asserted that it would have been to "our advantage if we had been part of this group".
Congress general secretary in charge of communications Jairam Ramesh took a swipe at Prime Minister Narendra Modi, saying the news of India not being part of the group comes after the PM had enthusiastically posted on social media about a telephone call with his "once-upon-a-time good friend and a recipient of many hugs in Ahmedabad, Houston, and Washington DC".
In a lengthy post on X, Ramesh said, "According to some news reports, the US has excluded India from a nine-nation initiative it has launched to reduce Chinese control on high-tech supply chains. The agreement is called Pax Silica, clearly as a counter to Pax Sinica. The nations included (for the moment at least) are the US, Japan, the Republic of Korea, Singapore, the Netherlands, the United Kingdom, Israel, the United Arab Emirates, and Australia."
"Given the sharp downturn in the Trump-Modi ties since May 10th, 2025, it is perhaps not very surprising that India has not been included. Undoubtedly, it would have been to our advantage if we had been part of this group."
"This news comes a day after the PM had enthusiastically posted on his telephone call with his once-upon-a-time good friend and a recipient of many hugs in Ahmedabad, Houston, and Washington DC," the Congress leader asserted.
The new US-led strategic initiative, rooted in deep cooperation with trusted allies, has been launched to build a secure and innovation-driven silicon supply chain.
According to the US State Department, the initiative called 'Pax Silica' aims to reduce coercive dependencies, protect the materials and capabilities foundational to artificial intelligence (AI), and ensure aligned nations can develop and deploy transformative technologies at scale.
The initiative includes Japan, South Korea, Singapore, the Netherlands, the United Kingdom, Israel, the United Arab Emirates, and Australia. With the exception of India, all other QUAD countries -- Japan, Australia and the US -- are part of the new initiative.
New Delhi will host the India-AI Impact Summit 2026 on February 19-20, focusing on the principles of 'People, Planet, and Progress'. The summit, announced by Prime Minister Narendra Modi at the France AI Action Summit, will be the first-ever global AI summit hosted in the Global South.
Prime Minister Modi and US President Trump on Thursday discussed ways to sustain momentum in the bilateral economic partnership in a phone conversation amid signs of the two sides inching closer to firming up a much-awaited trade deal.
The phone call between the two leaders came on a day Indian and American negotiators concluded two-day talks on the proposed bilateral trade agreement that is expected to provide relief to India from the Trump administration's whopping 50 per cent tariffs on Indian goods.
In a social media post, Modi had described the conversation as "warm and engaging".
"We reviewed the progress in our bilateral relations and discussed regional and international developments. India and the US will continue to work together for global peace, stability and prosperity," Modi had said without making any reference to trade ties.
