CM Siddaramaiah meets Micro Finance Institutions; asks them to adopt fair business practices

Bengaluru: Amid growing outrage, particularly among the rural population, over the coercive tactics used by Micro Finance Institutions (MFIs) for loan recovery, Chief Minister Siddaramaiah convened a meeting with MFI representatives at his official residence, Krishna, in Bengaluru this morning.

Siddaramaiah urged the finance companies to cease forceful recovery measures, threatening tactics and charging interest beyond the permissible limits. He warned of legal consequences for those continuing to harass farmers, women, and other borrowers, stressing that charging exorbitant interest rates is illegal. The meeting was attended by Dy.CM D.K. Shivakumar, Ministers H.K. Patil, Dr. G. Parameshwara, Krishna Byregowda, State Chief Secretary Shalini Rajneesh, State DG&IGP Alok Mohan and top officials from various departments.

Siddaramaiah questioned the MFI representatives on the steps they had taken to prevent their recovery agents from using force and what actions had been taken against such agents for their violent behaviour.

He also raised concerns about whether the companies had sought prior Court permission before seizing the property of defaulting borrowers, questioning who had given them the authority to take the law into their own hands.

The CM strongly warned against the practice of hiring rowdy elements for loan recovery and asked whether the MFIs had informed borrowers about RBI rules and conditions in their own language, ensuring they understood the terms.

He further inquired why the finance companies had not conducted proper KYC (Know Your Customer) checks before disbursing loans. If these checks had been done, he argued, multiple loans to the same individual could have been prevented, and the aggressive recovery methods would not have escalated to such alarming levels.