Finance Minister T Harish Rao’s instructions to bankers on verification of Self-Help Groups (SHGs) loan accounts have aided in refund of Rs 217.61 crore into the 2.03 lakh accounts of SHGs in the State.

According to Reserve Bank of India (RBI) instructions, banks will have to charge concessional interest rate of 7 per cent for loans upto Rs 3 lakh for rural SHGs. For loans above Rs 3 lakh to Rs 5 lakh, banks will extend credit at interest rate equivalent to their first year MCLR or any other external benchmark-based lending rate or 10 per cent a year, whichever is lower.

However, the Finance Minister reviewed the

interest component collected by the banks from SHGs and noticed discrepancies, resulting in huge losses to the SHGs.

During a State Level Bankers Committee (SLBC) meeting held on December 23, he instructed the bankers to verify the loan accounts of SHGs. He also wanted the bankers to refund excess interest, if collected.

Accordingly, the bankers made changes in the interest rates, which resulted in refund of Rs 217.61 crores into the 2,03,535 SHGs accounts. The Finance Minister along with Agriculture Minister is likely to review the status again at the SLBC meeting to be held on Tuesday.

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