The State Level Bankers Committee (SLBC) is understood to have worked out a debt swap scheme ‘Wrina Mukthi’ to ease the debt burden of the victims of private moneylenders.
The scheme offers to take over the debt against the certification of local body secretaries after collecting basic details about their loans. The beneficiaries will have to furnish details about their annual income, existing liabilities, and the financial institution from where they have availed themselves of the loan. The certificate to be issued by the local body secretaries comprises details of the amount borrowed and repaid and the securities held by the moneylender.
It would be issued on the basis of the information furnished by the borrower. Only one member of a family will be covered under the scheme. The beneficiary will have to certify that he will not be resorting to any non-institutional borrowing during the pendency of the loan.
The scheme specifies that the advance could be utilised only for the purpose of which it is sanctioned and in the event of any deviation, the bank reserves the right to cancel and recall the advance. The banks also reserve the right to revise the terms and interest rates. No major punitive measures have been proposed for violation of the norms.
Banking sector sources told The Hindu that the attempt to rush through the procedures to launch the scheme would have far-reaching consequences. For, the government had not brought the lenders within the legal framework. No step had been taken to trace the source of their funds and find out whether the loans were given for legitimate purposes. The burden of the ad hoc measures would thus be passed on entirely to public sector banks as private banks would shirk the responsibility of sharing the liability, sources said.
The decision to sanction the loans against the certificates of local body secretaries would lead to corrupt practices. The government should have constituted an authority comprising experts from the government and the banking sector to clear the applications, the sources said.