Rajapalayam MLA S. Thangapandian has flagged the issue of private finance companies putting pressure on members of Self Help Groups for women to pay their debts with interest despite the Reserve Bank of India giving a three-month moratorium on repayment of loans.
Following his complaint, Virudhunagar district administration has warned banks and microfinance institutions of action if they violated the RBI guidelines.
Mr. Thangapandian said he had received many complaints from SHG members about a private microfinance institution that insisted on the women to repay the loan amount with interest.
“I immediately visited the manager of the institution and pointed out the RBI guidelines about the moratorium for six months for repayment of loans,” the MLA said.
The women complained that they were getting knocks on their doors seeking repayment. “Similarly, some of them complained that the representatives of the financial institution threatened to lock some of the shops for non-payment of loans,” Mr. Thangapandian said.
Stating that all men and women had lost their jobs in the last two months and were finding it highly difficult even for their livelihood, the MLA feared that any distraint proceedings could lead to untoward incident.
“We are not against repayment of loan by those who could afford it, but only against putting undue pressure on the jobless people,” he added.
The MLA also met Virudhunagar Collector, R. Kannan, on Saturday and wanted the district administration to warn all the banks and financial institutions against violating the RBI norms.
Consequently, the district Collector issued a warning to all the nationalised and cooperative banks and microfinancing institutions against any coercive action.
“We have so far given ₹8.5 crore special loan for SHGs affected by the COVID-19 lockdown period,” the Collector said in a statement.
The Mahalir Thittam is ready to provide additional loans to the SHGs, he added.
