Karnataka Government Directs SLBC Not to Divert Gruha Lakshmi Funds for Loan Dues

The Karnataka government has formally instructed the State Level Bankers' Committee (SLBC) that the monthly financial assistance deposited into women's accounts under the Gruha Lakshmi scheme must not be adjusted towards loan repayments, interest or other outstanding financial dues.

Additional Chief Secretary and Development Commissioner Uma Mahadevan issued the communication to the SLBC convener, addressing growing concerns that welfare funds credited directly to beneficiaries are being seized by financial institutions. The directive ensures that the core objective of the social welfare program remains uncompromised by banking recovery procedures.

Under the flagship Gruha Lakshmi scheme, the state government transfers ₹2,000 every month to eligible women heads of households. The monetary support serves as a financial lifeline intended for household maintenance, daily necessities, and children's education. However, numerous complaints emerged alleging that commercial banks, cooperative banks, regional rural banks, and microfinance institutions were automatically debiting or adjusting the credited amounts against old loan balances without prior intimation.

The government intervention followed formal representations made by legislators and officials, including Guarantee Implementation Authority State Vice-President and MLC Dinesh Gooligowda, who highlighted the distress experienced by beneficiaries. Discussions regarding the unauthorized deductions had also surfaced during recent District Level Bankers Review Committee meetings, prompting district administrations to flag the practice.

According to the fresh guidelines, all financial institutions operating within the state must compulsorily desist from auto-debiting the monthly welfare transfer or applying it toward loan adjustments. Furthermore, the state administration has specified that any funds already deducted toward loan dues without the explicit written consent of the beneficiaries must be addressed.

The state machinery expects district authorities, alongside banking institutions, to monitor compliance closely and protect the financial interests of over 1.24 crore women enrolled in the program. Further reviews of district-level implementation are expected to be taken up in upcoming banking coordination meetings.