Karnataka tells banks to stop using Gruha Lakshmi payments for loan recovery

Karnataka’s government has instructed banks not to use the monthly ₹2,000 Gruha Lakshmi payment to settle loans, interest or other dues. Amounts already deducted without beneficiaries’ written consent must be immediately returned to the women’s accounts.

Additional Chief Secretary and Development Commissioner Uma Mahadevan wrote to the State Level Bankers’ Committee, or SLBC, convener on October 9. According to The Hindu, the guidelines require banks and other financial institutions in the state to stop adjusting these welfare transfers against loan obligations.

Banks were separately directed not to automatically debit the money from women’s accounts. The repayment instruction applies to sums already deducted for loan dues without clear written consent from the beneficiaries.

Chief Minister D.K. Shivakumar had issued corresponding directions after a representation from Dinesh Gooli Gowda, a legislative council member and state vice-president of the Guarantee Schemes Implementation Authority. The letter formalises those requirements for financial institutions handling the programme’s beneficiaries’ accounts.