Despite Karnataka’s recent efforts to crack down on aggressive microfinance loan recovery practices, a shocking incident in Mandya has brought the issue back into focus. A loan recovery executive from a microfinance company allegedly abducted two minors—a 7-year-old girl and her 13-year-old cousin—from Chilkunda village on Monday, over a loan repayment that was only a few days overdue.
According to police, the children were taken from their home while their parents were away. The boy was allegedly asked to lead the agent to the girl’s mother’s workplace, where the executive reportedly confronted her at an incense stick rolling unit regarding the unpaid EMI. Though the children were later safely returned home, the girl’s father filed a complaint on Friday, accusing the agent of kidnapping and insulting his wife.
The FIR invokes the provisions of the newly introduced Karnataka Micro Loan and Small Loan (Prevention of Coercive Actions) Act, 2025, aimed at curbing such coercive practices.
In Bengaluru, Home Minister G Parameshwara stated that if any illegal actions were confirmed, strict measures would be taken. Meanwhile, M Ravichandra, chairman of the Mysuru Child Welfare Committee, said the children were produced before the panel by social activists. Though the minors said they weren’t harmed, the official was cautioned and released.
This incident has reignited concerns about microfinance firms’ conduct, especially towards vulnerable borrowers.