Instances of two public sector banks in the district collecting interest on the subsidy component of Government schemes from beneficiaries have come to light during inspections.

The District Collector, N. Mathivanan, has taken note of these incidents and has directed the banks concerned to submit compliance/rectification report to the Lead Bank, official sources told The Hindu in Madurai on Tuesday. The Lead Bank for Madurai district is Canara Bank.

The Collector has given directions to the banks to reverse the excess sum collected from the beneficiaries and adjust them with their remaining payments. This issue was discussed during a review meeting of bankers held some time back, sources said.

So far, all such instances of excess collection have been found only in the rural branches such as Vilachery and Oomachikulam with no reports from urban branches located inside the city Corporation limits.

The complaints involve loans under the Swarna Gram Swarozgar Yojna (SGSY) that deals with creating rural self –employment with loan amounts usually being around Rs. 4 lakh a group for undertaking rural economic activity, sources said.

Several beneficiaries of Government schemes have also complained to the authorities concerned that banks were charging interest for subsidy component of the loan, sources said.

According to the Government of India norms governing back-ended subsidy schemes of the State and Central Governments, neither public nor private sector banks should charge interest on the subsidy component.

The banks officials of the branches concerned had said that these anomalies were the result of certain technical problems relating to software and were not intentional.

According to banking officials, all public sector banks in the district have been told to adhere to the Central Government norms and ensure that beneficiaries were not subject to unnecessary hassle by being made to pay excess amounts.