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Self-help groups run scared as loan dubbed ‘black’

With Assembly elections in Karnataka only around 18 months away, loan-distribution programmes involving cooperative banks have become a frequent and popular feature.

Written by Santosh Kumar R B | Bangarpet (kolar) | Updated: November 21, 2016 11:50:37 am
loans, black money, demonetisation, black money loans, Karnataka black money, SHGs, self help groups, self help group loans, india news Photo of loan disbursement that went viral.

Shortly after Prime Minister Narendra Modi’s demonetisation announcement on November 8, a picture from a small village in Kolar in Karnataka had begun doing the rounds on social media. It showed several local politicians on a dais behind a big stack of currency notes, and was shared with a caption stating they were distributing black money as loans to villagers to escape the law.

The photos had brought officials from the Anti-Corruption Bureau, Income Tax Department and even police rushing to the Nerale Kere village, located some 80 km from Bangalore. Both the Congress and BJP too had sought explanations from their leaders present on the dais.

WATCH VIDEO: How Demonetisation Impacts Rural Population


The loan mela, it turns out, was genuine, organised by the Kolar and Chikkaballapur District Cooperative Bank on November 7. However, such is the lasting effect of that photo that the beneficiaries who got the cash just a day ahead of the demonetisation announcement are too scared to deposit it, afraid of being targeted.

The cooperative bank that day sanctioned Rs 3.36 crore in all as loans to 69 self-help groups (SHGs) of women from 14 local villages. A public event was held to mark the disbursal of loans — whose photograph went viral — as local polticians reportedly wanted to share the credit for it. Before the event, the supporters of the politicians went around the area spreading news about it.

So, the bank that had issued cheques to the SHGs took them back to pay the amounts as cash at the event. The heads of SHGs were handed over the cash, to be distributed to more than 650 women. The women members of SHGs use these loans to run small enterprises. With Assembly elections in Karnataka only around 18 months away, loan-distribution programmes involving cooperative banks have become a frequent and popular feature across the Kolar region. Locals say leaders of the ruling Congress have been hijacking such loan programmes in Kolar and Chikkaballapur
districts to mislead loan beneficiaries into believing they are getting loans from the Siddaramaiah-led government.

“Many women who got the loans on November 7 are living in fear because officials from the Anti-Corruption Bureau
and Income Tax Department have visited the bank and collected details about the loans. Many beneficiaries are in a dilemma about what to do with the loan funds now,” says C Srinivas, a villager.

“My sister-in-law got Rs 43,000 as member of an SHG. Now she is afraid to deposit the money in her account for fear the bank may not return it to her. She thinks the money was given by Congress MLA S N Narayana Swamy. I am trying to tell her it is a loan sanctioned by the bank,” says Ramesh Kumar, a resident of Nerale Kere.

Accusing “miscreants” of spreading news that black money was handed out at the function, bank president Byalahalli Govinda Gowda, also affiliated to the Congress, said, “This is completely false and some bad people did it to defame the bank and local politicians.”

In fact, on the dais that day, an argument had broken out between BJP and Congress leaders after Narayana Swamy and Govinda Gowda said the loan was granted by the state government.

Health Minister Ramesh Kumar, a legislator from the district, said the cooperative bank has been doing good work. “The people who can’t tolerate it tried to defame it.”

G Parvathamma, the head of one of the SHGs granted funds on November 7, says she distributed the loans to nine of the 12 members in her group, but two members who did not receive their share are demanding their cash in the new currency.

“I received 4.75 lakh in cash at the event on November 7. I distributed Rs 43,000 each to nine members. Two members want me to give their money in new currency because the cash is all in Rs 500 and Rs 1,000 denominations. I have to deposit the money in my bank and withdraw it to give them new currency,” Parvathamma says. “What should I tell the bank when I go to deposit Rs 1.29 lakh (including her own share)?”

B V Mahesh of the BJP, a zila panchayat member, was among those present on the dais at the loan programme. Asked by the BJP about it, Venkatesh furnished local media reports to show that it was a bank event and not a private programme organised by MLA Swamy.

After the demonetisation announcement triggered a shortage of supply of new currency, Chief Minister Siddaramaiah had written to Finance Minister Arun Jaitely seeking capitalisation of cooperative banks. He had asked that the cash supplies to the cooperative sector be enhanced since a shortage would affect its seven lakh customers in Karnataka, especially farmers.

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