India, Feb. 4 -- To curb the deaths by suicide over coercive loan recovery tactics employed by microfinance institutions (MFIs) and unlicensed moneylenders, the ordinance drafted by the state government has proposed stringent measures, including full loan waivers for borrowers who took loans from unlicensed lenders, restrictions on interest rates, and legal immunity from repayment demands, officials familiar with the matter said.

The Karnataka Microfinance (Prevention of Coercive Actions) Ordinance, 2025, which has been revised multiple times to ensure it withstands legal scrutiny, was sent to chief minister Siddaramaiah on Sunday for approval after which it will be forwarded to governor Thaawar Chand Gehlot for final clearance.

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