Karnataka High court Upholds Micro Loan & Small Loan Ordinance, 2025

The Karnataka High Court has upheld the validity of the Karnataka Micro Loan and Small Loan Ordinance, 2025, ruling that motor vehicle and asset financing businesses are exempt from its purview. 

Justice M. Nagaprasanna ruled that the Ordinance protects vulnerable borrowers from exploitative lenders and coercive recovery methods, calling it a social justice measure. He deemed it reasonable and essential for borrower protection.

The Court ruled in favor of the Karnataka Hire Purchase Association (KHPA), stating it does not fall under the Ordinance's scope, granting the relief sought in the petition.

The court clarified that the ordinance only applies to unsecured microfinance loans and does not affect legitimate asset financing operations.