Microfinance Crisis in Karnataka state

Karnataka is currently grappling with a significant microfinance crisis, marked by widespread reports of harassment and exploitation by microfinance institutions (MFIs), particularly targeting vulnerable populations. These institutions have been accused of employing aggressive recovery tactics, including coercion and intimidation, leading to severe consequences such as mass migrations and suicides among affected communities.

In districts like Kodagu, Haveri, and Chamarajanagar, numerous families have abandoned their homes to escape relentless harassment from MFI agents. These agents often charge exorbitant interest rates and resort to extreme measures to recover loans, exacerbating the financial and emotional distress of borrowers.

The crisis has prompted public outcry and demands for government intervention. In Haveri district, women have initiated the 'Save Mangalya Sara' campaign, sending mangalsutras to Chief Minister Siddaramaiah to highlight their plight and seek immediate action against exploitative MFIs.

Political leaders have also voiced concerns over the situation. Former Chief Minister and BJP MP Basavaraj Bommai criticized the state government for failing to regulate MFIs, alleging that the lack of oversight has led to widespread harassment and exploitation of citizens.

In response, Home Minister G. Parameshwara acknowledged the severity of the issue and emphasized the need for the Finance Department to take decisive action against unlicensed MFIs operating without proper authorization. He assured that complaints from affected individuals would prompt immediate investigation and legal action.

Women's organizations across Karnataka have united to launch a campaign under the banner 'Women’s Forum Against Illegal Practices in Microfinance, Karnataka.' This initiative aims to encourage public dialogues, engage with women's organizations, and document the experiences of women affected by MFIs across the state. The forum is advocating for stricter regulations to control the unethical practices of these institutions.

The ongoing crisis underscores the urgent need for comprehensive regulatory measures and effective enforcement to protect vulnerable populations from predatory lending practices in Karnataka.