‘Role of Government to be limited to providing interest subsidy on loans’
HYDERABAD: Chief Minister Y.S. Rajasekhara Reddy said that the margin money for programmes funded by various finance corporations under the control of the State Government would go hereafter.
The role of the Government would be limited to providing interest subsidy on loans borrowed from banks by beneficiaries of the programmes.
The beneficiaries would have to pay three per cent interest and the rest of the interest charged by banks would be met by the Government, he said while participating in the loan waiver mela organised by the Hyderabad Collectorate on Saturday.
Dr. Reddy defended the decision to discontinue the release of margin money to finance corporations representing SC, ST, BC, minority and other sections on the ground that the Government could not assume the role of banks by indulging in lending and recovery.
It could at best arrange loans to beneficiaries of its programmes and subsidise the interest component.
Dr. Reddy also said that the Government finance corporations were not supposed to recover money as it was lent to the poor. As far as possible, they should be in a position to assist the beneficiaries.
It was with this objective that the Government recently waived margin money and interest on loans borrowed by 46.81 lakh beneficiaries from finance corporations across the State.
An amount of Rs. 1,905 crore was waived as part of the programme.
The Chief Minister observed that the Government had ensured a congenial atmosphere for lending by banks before backing out from providing margin money.