Bengaluru, March 7 -- The Karnataka government tabled the Karnataka Micro Loan and Small Loan (Prevention of Coercive Actions) Bill, 2025, in the legislative assembly on Thursday. The proposed legislation seeks to provide relief to borrowers by discharging loans taken from unlicensed microfinance institutions (MFIs) and preventing coercive recovery measures.

According to the bill, borrowers would no longer be required to repay loans, including interest, taken from unlicensed MFIs. It states, "Every loan, including the amount of interest, if any, payable by the borrower to the MFIs which are unlicensed and unregistered, shall be deemed to be wholly discharged. No civil court shall entertain any suit or proceeding against the borrower for ...