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T.N. warns against physical collection of interest on loans

Ranganathan Street wears a deserted look following the lockdown.S.R. Raghunathan

Ranganathan Street wears a deserted look following the lockdown.S.R. Raghunathan  

Any violation of order will invite criminal action, says govt.

The Tamil Nadu government on Thursday ordered private banks, microfinance institutions and self-help groups to stop, until further orders, collection of daily, weekly, monthly interest or capital from customers. After a meeting chaired by Chief Minister Edappadi K. Palaniswami at the Secretariat, the government warned that, in light of the economic inactivity following the COVID-19 lockdown, those violating the order will face criminal action.

The order will not apply to the payment of housing or auto loan EMIs, it is reliably learnt.

A senior official, involved in the discussions, told The Hindu that “physical collection” of money should be stopped by these institutions, since prohibitory orders were in place and stepping out of houses was allowed only for delivery of “essential services”.

“Collection of money by agents is not part of essential services. The automatic debit of EMIs from bank accounts will go on,” the official explained.

EMI payments

On EMIs of private banks, a top official told The Hindu : “Private banks should come forward to defer the interest due dates, considering the prevailing unusual circumstances. It is an emergency.”

Asked if the State could direct financial institutions, he said, “It is a direction and if anybody challenges, we [the State government] will see. It is only a deferment due to unusual circumstances.”

The decision of the State government is expected to benefit people who pay interest in cash.

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