Harish Rao raps banks for collecting excess interest from SHGs

Finance Minister T Harish Rao asked bankers to return the excess interest collected from Self Help Groups (SHGs) beyond the RBI regulations within a month along with interest accrued on the excess interest. He also warned them against collecting levy charges from SHGs against the RBI norms.

Participating in the State Level Bankers Council (SLBC) meeting at the MCR HRD Institute here on Friday, Harish asked the banks to collect interest from SHGs as per the RBI norms, i.e., 7 per cent for loans under Rs 3 lakh and 10 per cent for loans between Rs 3 lakh and Rs 5 lakh.

The Minister observed that certain banks were not implementing the revised interest rates, causing an unnecessary loss for both SHGs and the State government. He wanted the excess interest collected from the SHGs to be deposited back into their accounts within a month.

Harish pointed out that the SHGs were promptly repaying their loans. While the Society for Elimination of Rural Poverty (SERP) officials



were handling services such as mobilisation, documentation, monitoring and recovery, among others, he faulted the banks for charging the SHGs Rs 500-5,000 towards these services under different guises. He wanted the bankers to submit a detailed report to the State government in this regard.

He said the Medak DCCB had signed a memorandum of understanding to share five per cent of the interest with village organisers as well as Mandal Samakhya and Zilla Samakhya as they were handling mobilisation and other services. He suggested that other banks extend a similar facility.

Further, Harish asked the banks to extend support to oil palm cultivation in the State and provide more loans to agriculture and allied sectors, along with education and home loans.

He also wanted them to provide loans to Micro, Small and Medium Enterprises (MSMEs) and sanction bridge loans, assuring support on behalf of the State government in this regard.