Maharashtra launches scheme to offer personal loans for prisoners.

Why in news?

• The Maharas htra government has introduced a scheme that allows prisoners to obtain personal loans from banks of up to Rs. 50,000 to help their families improve their living conditions and meet expenses related to their legal matters. It will be a first of its kind initiative in our country.
• The Maharashtra State Co-operative Bank would provide loans up to 50,000 under the scheme at a 7% interest rate. The scheme would be implemented in Yerawada Central Jail in Pune, Maharashtra, on a pilot basis.
• The decision was taken in a meeting presided over by Dilip Walse Patil, Home Minister of Maharashtra and a Government Resolution (GR) was also issued.

About the scheme

• It is the first innovative scheme in India that offers prisoners a loan based on the income earned while working in a prison. It needs no guarantor and will be disbursed on a personal bond.
• This type of loan is called a “khavti” loan, and benefits approximately 1,055 prisoners.
• The loan facility will be determined by the bank based on the prisoner’s loan limit, duration of punishment, the possibility of relief, the prisoner’s age, the estimated annual working day, and the minimum daily income.
• The lending bank will be fully responsible for ensuring that the loan amount is used to serve the needs of the family concerned or to pay the fees of their lawyers or for other legal matters.
• In addition, 1% of the amount collected by the bank from loan repayment will be donated to the Prisoners’ Welfare Fund on an annual basis.