Bengaluru: The Karnataka government has directed banks not to adjust the monthly Rs 2,000 assistance provided to women under the Gruha Lakshmi scheme against outstanding loan instalments, interest or other dues. It has also ordered the immediate refund of amounts deducted without the beneficiaries’ explicit written consent.

Additional Chief Secretary and Development Commissioner Uma Mahadevan has issued instructions to the convenor of the State Level Bankers’ Committee (SLBC), directing all commercial banks, cooperative banks, regional rural banks and other financial institutions to comply with the order.

The move follows complaints from women beneficiaries that banks were deducting the financial assistance credited under the scheme to recover outstanding loans. The government has asked banks to prevent such deductions and ensure that the money reaches beneficiaries for its intended purpose.

Banks directed to stop automatic deductions

Under the new directions, the SLBC convenor has been asked to issue a circular to all banks and financial institutions, making it clear that the monthly Gruha Lakshmi assistance must not be automatically debited or adjusted against outstanding loan dues.

Banks have also been instructed to introduce the necessary technical safeguards to prevent unauthorised deductions from beneficiaries’ accounts. Clear instructions must be issued to branch-level staff to ensure uniform implementation of the government’s directions.

The government has further directed banks to re-credit amounts already deducted towards loan repayments, interest or other dues without the beneficiaries’ explicit written consent.

The instructions cover commercial banks, cooperative banks, regional rural banks and other financial institutions operating in the state.

The SLBC convenor has been asked to ensure strict compliance and submit an action-taken report to the government detailing the steps implemented by the banks.

Copies of the communication have also been sent to the Secretary of the Women and Child Development Department, Deputy Commissioners and chief executive officers of zilla panchayats for necessary action.

Dinesh Gooligowda raises complaints with Chief Minister

The government’s intervention follows a representation by MLC and State Vice-President of the Guarantee Schemes Implementation Authority Dinesh Gooligowda to Chief Minister D K Shivakumar.

Gooligowda highlighted complaints from women beneficiaries who alleged that banks were deducting the monthly assistance credited under Gruha Lakshmi towards repayment of old loans.

In his representation, he argued that such deductions defeated the purpose of the scheme, which was introduced to provide financial support to women and help them manage household expenses.

He pointed out that the monthly assistance was intended to help women meet essential family needs, contribute towards their children’s education and strengthen their financial independence.

When the amount is deducted towards outstanding dues without the beneficiary’s explicit consent, the intended financial support may not reach the household, he argued.

Following the Chief Minister’s directions, the state government instructed the SLBC convenor to communicate the requirements to all banks and ensure that the assistance is protected from unauthorised adjustment.

Government orders refunds of unauthorised deductions

Apart from preventing future deductions, the government has specifically directed banks to refund amounts already deducted without the beneficiaries’ explicit written consent.

The refund directive is intended to address complaints from women whose scheme benefits were allegedly used to recover outstanding loan instalments, interest or other dues.

Banks have been asked to take the necessary steps to identify and reverse such deductions in accordance with the government’s instructions.

The involvement of the SLBC is expected to help coordinate implementation across different categories of financial institutions, while instructions to Deputy Commissioners and zilla panchayat CEOs are intended to support monitoring at the district level.

The government has also sought an action-taken report to assess compliance with the directions.

The requirement for written consent is a central feature of the instructions. The order specifically addresses deductions made without such consent, rather than declaring that all loan recovery from a beneficiary’s account is prohibited in every circumstance.

Gooligowda seeks action against coercive recovery practices

In his representation, Gooligowda also called for strict action against private finance institutions allegedly using coercive methods to recover loans from women beneficiaries.

He raised concerns about reported practices that included threats to borrowers and sought government intervention to protect affected women.

Gooligowda urged the state administration to ensure refunds of unauthorised deductions and called on Deputy Commissioners and Superintendents of Police to monitor complaints in their respective jurisdictions.

The proposed monitoring would help authorities identify grievances and take appropriate action against institutions found violating applicable rules.

The concerns raised by Gooligowda extend beyond the deduction of Gruha Lakshmi assistance, focusing also on the manner in which loans are recovered from vulnerable borrowers.

The government’s directions to banks and district authorities are aimed at addressing these complaints through institutional monitoring and compliance measures.

Gruha Lakshmi assistance intended to support household expenses

The Gruha Lakshmi scheme is one of Karnataka’s guarantee programmes and provides eligible women with monthly financial assistance of Rs 2,000.

The support is intended to help beneficiaries meet household expenses and improve their financial security. For many families, the monthly amount contributes towards everyday needs, including groceries, education-related expenses and other essential spending.

The latest directions seek to ensure that the assistance remains available to beneficiaries instead of being automatically diverted towards outstanding loan dues without their explicit written consent.

For women who believe that their benefits have been deducted, the government’s order places responsibility on financial institutions to comply with the refund instructions and on the relevant authorities to monitor implementation.

The effectiveness of the measure will depend on banks introducing the required safeguards, informing branch-level staff and addressing cases of unauthorised deductions.

With the SLBC convenor required to submit an action-taken report, the government will be able to review the steps taken by financial institutions to implement its instructions.