Daijiworld Media Network - Bengaluru

Bengaluru, Feb 2: In a bid to curb exploitation by microfinance institutions, the state government is set to roll out a new law, with key provisions discussed in a high-level meeting led by law minister H K Patil and revenue minister Krishna Byre Gowda on Saturday.

The government held discussions with officials to introduce an online portal to track loan disbursements and ensure transparency, aiming to prevent predatory lending practices that trap the poor in debt. The new system will keep a real-time record of who received loans and how much, and all loan applications and approvals will be processed online.

Microfinance companies will also be required to register with the state, with no scope for rejection by the government. The interest rates must align with Reserve Bank of India guidelines. To oversee operations, an ombudsman, including district officials, will be appointed in each district.

Importantly, the law will prohibit these companies from seizing assets as collateral and restrict the use of intermediaries to pressure loan defaulters. These reforms are set to protect the vulnerable and tighten regulations in the sector.