Kerala home minister asks NBFCs to fall in line

All non-banking financial companies (NBFCs) operating in Kerala have been asked to adhere to fair banking practices as prescribed by the RBI or face legal action, a state minister said Thursday.

Home Minister Ramesh Chennithala said here that ever since "Operation Khubera" was launched two weeks ago, he has been receiving numerous complaints against illegal money lenders and the NBFCs.

"Operation Khubera" was launched by Kerala police to target unregistered money lenders who have become a menace to society as they lend money at exorbitant interest and threaten the borrowers over repayment.

"I have received more than 10,000 calls on my mobile of people complaining about the illegal money lenders and their style of operation. The NBFCs operating in the state appear to also have breached the law and started making people's life uncomfortable. If they do not change their style of working, the government will be forced to act against them," Chennithala told reporters.

Police conducted 7,244 raids, registered 1,012 cases, arrested 586 people and seized unaccounted money to the tune of Rs 3.8 crore beside foreign currencies and gold in two weeks since the clampdown on the illegal money lenders and such companies.

He said the meeting with the state level bankers committee last week appeared to have paid dividends and they will soon be coming up with a scheme to help people to come out of the debt trap by extending a soft loan without any collateral security.

"They have in principle agreed to give Rs.50,000. I have written to the chairmen of all the banks to see that they increase this to Rs.one lakh. This money will be given directly to the applicant's creditors (registered private money lenders) to settle their outstanding dues. The person availing this loan has to repay it to the bank in five years at the basic rate of interest. Only one person in a family can avail this soft loan," added Chennithala.

Chennithala said he received complaints regarding the exorbitant charges levied by the state owned financial institutions and will look into their operations also.