Gruhalakshmi funds should not be diverted for loan recovery, CM directs banks

Bengaluru: Chief Minister D.K. Shivakumar has directed the state government to issue clear instructions to banks and financial institutions against adjusting the ₹2,000 monthly Gruhalakshmi assistance towards loan instalments or interest dues of beneficiaries.

The direction came after Dinesh Gooligowda, Karnataka Legislative Council member and vice-president of the state Guarantee Implementation Authority, submitted a representation highlighting complaints from women beneficiaries. Shivakumar responded positively to the request and instructed Chief Secretary Shalini Rajneesh to write to bank managements and ensure that Gruhalakshmi funds are not deducted towards outstanding loans.

According to the representation, ₹2,000 is credited every month to the accounts of around 1.24 crore women heads of households under the Gruhalakshmi scheme. The assistance is intended to support household expenses, children's education and women's financial independence. However, Gooligowda alleged that some commercial banks, private finance companies and microfinance institutions were deducting the amount soon after it was credited, citing pending loan instalments or interest.

The representation said such deductions, particularly when made without bringing the matter to the beneficiary's notice, could defeat the intended purpose of the welfare assistance. It also referred to discussions in recent District Level Bankers' Review Committee meetings, where the issue was reportedly taken up and directions were issued against using Gruhalakshmi payments for loan recovery.

Gooligowda has sought a strict circular through the State Level Bankers' Committee directing public and private banks not to adjust the assistance against old loans, agricultural or non-agricultural borrowings, or interest dues.

He has also sought action against private finance companies or agents allegedly resorting to coercive recovery after the assistance reaches beneficiaries' accounts. The representation called for repayment of amounts already deducted without the beneficiary's written consent and greater monitoring by district administrations, police and local authorities.

The Chief Minister's direction is expected to provide greater clarity to banks and protect the monthly assistance from being automatically diverted towards outstanding dues.

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Coovercolly Indresh

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