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Kerala Gramin Bank’s EMI Deductions from Wayanad Landslide Survivors’ Emergency Relief Fund: Technical Glitch or Negligence?
The Kerala Gramin Bank came under heavy criticism for deducting loan EMIs from the emergency relief fund provided to survivors of the Wayanad landslide. Following protests and media reports, the state government intervened to stop the deductions and ordered a refund.

Author: Abhivad
Published: August 19, 2024
In the wake of the devastating landslides in Wayanad on 30 July 2024, the Kerala Gramin Bank has found itself at the center of a controversy for deducting loan EMIs from the emergency relief fund provided to survivors. The incident has sparked protests and drawn criticism, prompting intervention from the state government to reverse the deductions.
Protests Erupt Over EMI Deductions
The controversy began when survivors of the Wayanad landslide, who had received an emergency relief fund of Rs 10,000 from the Kerala government, noticed that Kerala Gramin Bank had deducted loan EMIs directly from their accounts in the Chooralmala branch of Kerala Gramin Bank. The deductions, which ranged from Rs. 1500 to Rs. 5000, led to public outrage, particularly among locals and youth organisations in Kalpetta, who staged protests at the regional office of Kerala Gramin Bank.
(Democratic Youth Federation of India (DYFI) protesting at the Kalpetta Regional Office of Kerala Gramin Bank.)
Government Intervention and Refund Order
Responding to the growing outcry, Kerala Chief Minister Pinarayi Vijayan quickly intervened. Upon learning of the issue through media reports, the CM directed Wayanad District Collector D R Meghashree to submit an urgent report on the matter. Following the report, the state government issued an order mandating that any amount deducted from the accounts of disaster survivors after 30 July be refunded immediately. The order, applicable to all scheduled banks, was issued by the District Disaster Management Authority, chaired by the Wayanad Collector.
Technical Error or Negligence?
While the Kerala Gramin Bank has acknowledged the deductions, it attributed them to a technical error. Sources close to the bank indicated that the deductions were made under an auto-debit mandate(or standing instruction), a clause that borrowers are required to sign when applying for loans. This mandate allows the bank to automatically deduct EMIs from the account without further approval from the account holder. However, the bank’s decision to proceed with the deductions in such a crisis situation has been widely criticized.
Chief Minister Vijayan addressed the issue during a special meeting of the State Level Bankers’ Committee (SLBC), noting, "The bank has conveyed that it was a technical mistake. They shouldn’t have resorted to such a mechanical approach in a situation like this."
Public Response and Bank’s Reputation
The President of the All India Regional Rural Bank Employees Association (AIRRBEA), C Rajeevan, also weighed in on the controversy. Speaking to Kanal, he commented, “The controversy regarding the deduction of loan EMIs from the distressed people of the landslide-hit region must have been avoided. A lot of commoners from the high range rural region like Wayanad rely on Kerala Gramin Bank for small borrowings. The controversy has caused loss of reputation for the bank."
Rajeevan further criticised the bank management for not taking proactive steps to exclude the disaster-hit region from such recoveries and for delaying their explanation until protests intensified.
Active Role of Gramin Bank Employees in Relief Work
In contrast, the Kerala Gramin Bank Employees’ Union (KGBEU) and the Officers’ Union (KGBOU) have been active in supporting the rehabilitation efforts in Wayanad. Shortly after the disaster, KGBEU submitted a letter to the bank management, proposing the utilisation of the bank's Corporate Social Responsibility (CSR) funds for relief work.
The employees’ union and the officers’ union had also launched a fund collection drive among their members for disaster relief. P Rajesh, General Secretary of KGBOU told Kanal that unions have decided to sponsor the construction of 10 homes for those who lost their homes in the landslide.
In addition, the Kerala Bank management has also issued a circular to all its staff members to donate two-days salary to be handed over to the Chief Minister’s Distress Relief Fund.
(The circular released by the Coordination Committee of Kerala Gramin Bank Employees’ and Officers’ Unions urging their members to contribute to the relief fund collection drive to rebuild Wayanad.)
Call for Loan Waivers
The controversy surrounding Kerala Gramin Bank's actions is especially significant in light of the fact that Kerala Bank, the state’s own bank formed by the merger of district cooperative banks, has already written off the entire loans of the affected people. During the SLBC meeting, Chief Minister Vijayan urged all scheduled banks to follow Kerala Bank’s example and write off the loans of those who lost everything in the landslide.
Declaring a moratorium or giving concessions on interest, as the banks usually do, won’t be enough in the case of Wayanad. Many of the borrowers have disappeared. Nothing can be done on that land. Everyone should follow the example of Kerala Bank’s decision to write off the loans,” the CM asserted.
The incident has highlighted the need for sensitive handling of financial matters in disaster-stricken regions. While the Kerala Gramin Bank has promised to rectify the error, the controversy has raised broader questions about the responsibilities of financial institutions in times of crisis.