Karnataka orders banks not to divert Gruha Lakshmi payments to debt

Karnataka Chief Minister D.K. Shivakumar has directed the state administration to instruct banks and financial institutions not to use Gruha Lakshmi payments to recover loan instalments or interest. Shivakumar issued the direction in a letter to Chief Secretary Shalini Rajneesh after receiving a representation from Dinesh Gooligowda, vice-president of the Guarantee Implementation Authority and a member of the Legislative Council.

“Write to the Bank Management Board, clearly inform them not to deduct money from Gruha Lakshmi beneficiaries’ accounts towards loan instalments,” the Chief Minister directed, according to the report. Gooligowda said women were facing deductions by commercial banks, private finance companies and microfinance institutions as soon as the benefit was credited. He said the monthly payment of ₹2,000 to 1,24,48,000 women heads of families was intended to support daily needs, children’s education and self-reliance.

According to his representation, deductions were being made against old dues or interest without informing beneficiaries. He argued that this undermined the purpose of the scheme. He also said District Level Bankers Review Committee meetings had treated the issue seriously and that district administrations had clarified that the money should not be taken for loan instalments or interest.

Gooligowda urged the Chief Minister to seek criminal action against private finance companies or agents who forcibly collected payments or threatened beneficiaries. He also called for licences to be cancelled where appropriate and for deputy commissioners and superintendents of police to monitor complaints continuously. The supplied report did not state when the instructions would be issued, how banks would implement them or whether any institution had already faced penalties.

It also did not provide the number of alleged deductions or the total value involved.