It looks like there’s been a mix-up—today’s news out of Karnataka isn’t about punishing people for sharing “unverified information,” but rather targets microfinance institutions that use coercive tactics against borrowers.

Here’s what’s actually unfolding:

• The Karnataka government has drafted the Micro Finance (Prevention of Coercive Actions) Ordinance, 2025.
• This draft, already approved by the cabinet and sent to Governor Thawar Chand Gehlot for assent, proposes punishing microfinance firms—and unauthorised moneylenders—with:
  • Up to 10 years in jail, and
  • Fines as high as ₹5 lakh

The move comes after a wave of complaints and borrower suicides, which reportedly stem from aggressive and inhuman recovery methods—like repeated home visits, intimidation, seizing documents, and violence .

Earlier iterations of the draft suggested shorter punishment (3–5 years), but the current version significantly toughens the penalties “to ensure the heat of the law is felt”

Alongside jail time and fines, the ordinance includes:

• Mandatory registration of microfinance institutions,
• Suo motu police powers (officers can initiate cases without a complaint),
• Appointment of an ombudsman,
• Cancellation of license and discharge of loans from unregistered entities

sources