Rajapalayam MP S. Thangapandian pointed out the problem of private financial companies pressuring members of self-help groups to have women pay their debts with interest despite the Indian Reserve Bank’s three-month moratorium on loan repayment.
Following his complaint, the Virudhunagar district administration warned banks and microfinance institutions to act if they violated RBI guidelines.
Mr Thangapandian said he had received numerous complaints from SHG members about a private microfinance institution insisting that women repay the loan amount with interest.
“I immediately visited the director of the institution and pointed out to him the RBI guidelines regarding the six-month moratorium on loan repayments,” the MP said.
The women complained that they were being knocked on their doors asking for a refund. “Likewise, some of them complained that the representatives of the financial institution threatened to close some stores for non-payment of loans,” Mr. Thangapandian said.
Stating that all men and women had lost their jobs in the past two months and found it very difficult even for their livelihood, the MP feared that any foreclosure proceedings could lead to an untoward incident.
“We are not against repayment of the loan by those who can afford it, but only against undue pressure on the unemployed,” he added.
The MP also met with Virudhunagar collector R. Kannan on Saturday and called on the district administration to warn all banks and financial institutions against violating RBI standards.
As a result, the District Collector warned all nationalized and cooperative banks and microfinance institutions against any coercive action.
“So far, we have given a special loan of 8.5 crore to SHGs affected by the COVID-19 lockdown period,” the collector said in a statement.
Mahalir Thittam is ready to provide additional loans to SHGs, he added.