Chennithala flays banks' 'reluctance' to disburse loans

Thiruvananthapuram: Home Minister Ramesh Chennithala Thursday flayed the "reluctance" of commercial banks in disbursing loans to needy people in the state, saying a scheme formulated for helping debt-ridden persons has failed due to non-cooperation by these banks.

Both public sector and scheduled banks in the state did not co-operate with state government in its ambitious 'Rinn Mukthi', a scheme for swapping distressed persons' debt taken from private money lenders', Chennithala told reporters here.

"Now we have lost hope on these banks. State Co-operative banks are supporting the government in the programme of extending funds to debt-hit individuals to clear their loans with money lenders, known locally as blade companies, due to exorbitant interest rate charged by them.

Stating that the 'Operation Kubera', raid against illegal private lenders and blade companies, started a year ago was a success, the Minister said the Congress-led UDF government proposed 'Rinn Mukthi' scheme as an alternative way to extend loan facilities to needy.

'I am sorry to say that the scheme is a failure as public sector and scheduled banks in the state did not support the project', he said adding credit-deposit ratio of commercial banks in the state was also very low.

Chennithala said he had taken up this matter with Union Finance Minister Arun Jaitely during his recent visit to Delhi.

When asked whether the government would consider shifting all its financial transactions from commercial banks to co-operative banks as a protest, Chennithala quipped "it is an extreme step."

As part of the second phase of 'Operation Kubera', police would also look into complaints against Non-Banking Financial Institutions, if any violated RBI rules and guidelines.

On 'Operation Sureksha' programme of state police, he said more than 90,000 persons with criminal background had been arrested since the programme began in February last.