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Illegal interest in disabled kitty

New Delhi, April 20: The Supreme Court has created a Rs 7,000-crore fund for the welfare of the handicapped from the money banks have “illegally” accumulated by rounding off interest rates payable by borrowers.

A division bench of Chief Justice V.N. Khare and Justice S.B. Sinha in an April 16 judgment struck down the banking practice of rounding off 0.25 per cent interest.

Acting on a public interest litigation, it said the money thus appropriated by banks over the last 10 years — estimated to be Rs 723.79 crore per annum on an average — should be put in a trust for the welfare of the disabled.

The court found there were more than five crore borrowers whom it “may not be able to” identify and effectively monitor recovery. The Centre, too, did not undertake the “exercise of identifying the borrowers and refunding the excess amount recovered”.

“We, therefore, are of the opinion that a fund may be created for the benefit of the disadvantaged people,” the judges said while ordering the creation of the fund under the Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act.

The Supreme Court said “in India, the number of disabled people is around 100 million and there are approximately 160 million victims, direct and vicarious, of disablement”.

It said the law aimed to provide equal opportunities and protect the rights of the disabled. The fund should be put in the corpus to be created under a national trust, the bench said.

The court said the fund should be managed by the comptroller and auditor-general (CAG), adding: “We request the CAG to effect recoveries of all the excess amounts realised by way of interest tax (by the government) and interest (rounded off) by the banks and other financial institutions and create the corpus of such fund therefrom.”

All banks and financial institutions have been directed to contribute Rs 50 lakh each to the corpus.

The apex court said the CAG would be chairman of the national trust and the Union finance and law secretaries ex-officio members.

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