Bengaluru, Jan. 31 -- Even as the harassment by money-lenders and Microfinance Institutions (MFIs) during loan recovery continues, the Karnataka Government has proposed a three-year imprisonment and other strictures for microfinance companies under a Law it has drafted to protect borrowers from harassment.

The State Cabinet on Thursday authorised Chief Minister Siddaramaiah to finalise the draft of the Karnataka Micro-Finance (prevention of coercive and inhuman actions) Bill.

The Law, which the Government wants to enact by promulgating an ordinance, is in response to a spate of suicides, assaults and numerous complaints against predatory loan recovery by Microfinance firms. The Penal provisions proposed by the Government include a jail ...