Don’t cut postal interests: PMK to RBI

“The RBI’s decision to cut interest rates for postal savings scheme is condemnable. Already the rate for savings account in post offices are low and if the rates are further lowered livelihood of senior citizens who are dependent on it will be affected,” said Ramadoss, in a tweet.

Ramadoss, in another statement, said micro finance schemes has turned into a modern-day usury. “Due to higher rate of interests demanded by micro finance companies several families in the state are committing suicide and the micro finance scheme is turning to be a modern-day usury,” said Ramadoss.

He also said that micro finance scheme was designed to help poor people come out of their poverty by providing loans at cheaper rate of interests. Women of self-help groups (SHGs) who are monitored by banks and NGOs do not facethe problem but women who are outsidethe SHGs are the primary targets of micro finance companies.

The micro finance companies identify the women with needs and form a small group to disburse loans with high interests. “Micro finance companies provide loan to the tune of Rs 20,000 per individual and collect Rs 625 per week which will turn out to be Rs 32,500 per year. Though it may seem as 62.5 per cent of interests per year if split into weeks the interest rates will be 75 per cent which is 10 times higher than the interests collected by banks. To repay the loan women had to save Rs 100 per day and in rural areas saving Rs 100 per day is a huge task,” said Ramadoss.

He further said that to repay the loan women had to get another loan and are caught in the vicious cycle of debt. Centre should intervene in the issue by relaxing the norms for obtaining loans from public sector banks to women who are not in SHGs.