Cabinet approves draft bill to safeguard homes of loan defaulters

Thiruvananthapuram: The state government is moving to enact a law preventing banks and financial institutions from confiscating the sole residences of people who have no other place to live. The cabinet has approved the draft of the Kerala Sole Residence Protection Bill, which will be tabled in the assembly session beginning Monday.

The proposed law will protect borrowers who face losing their homes due to loan defaults caused by circumstances beyond their control, rather than wilful default. Committees will be set up at the district and state levels to examine such cases.

Eligibility criteria include an annual income of less than Rs 3 lakh and a total loan liability not exceeding Rs 5 lakh, including fines and interest, with an upper ceiling of Rs 10 lakh.

The government will also establish a special fund to waive liabilities owed to financial institutions under specified conditions. Protection will apply only to those who have borrowed from public sector banks, nationalised banks, cooperative institutions and state-controlled bodies such as Kerala State Financial Enterprises Limited (KSFE) and Kerala Financial Corporation (KFC). Borrowers from private financiers and microfinance institutions will not be covered.