Farmers Protest outside Indian Overseas Bank in Trichy, Banks Recovering Loan from Other Accounts of Customers

Trichy, June 24 – A group of farmers in Trichy, led by P. Ayyakannu, protested in front of the Indian Overseas Bank (IOB) on Monday. They were upset that banks were using money from government schemes—like MGNREGS wages, old-age pensions, and other benefits—to pay back old loans taken by the farmers. Normally, Banks have right to set-off and Banks can do loan recovery from other accounts. This rule is explained below.

The farmers said this practice is unfair. They are already struggling and have been asking for crop and education loan waivers. Instead of helping them, the banks are taking away their welfare money without asking. Ayyakannu said, “We are still fighting for loan waivers, but the banks are taking away our benefits to repay the loans.”

Police Stop the Protest, Bank Talks to Farmers

The farmers tried to enter the IOB bank as part of their protest. However, the police stopped them. Later, the Regional Manager of IOB spoke to the farmers and assured them that their problems would be looked into. After this, the farmers ended their protest peacefully.

The protest was mainly because of an incident at the IOB branch in Pachaperumalpatti, near Thuraiyur. There, the bank reportedly took money from farmers’ accounts—money that came from welfare schemes—and used it to repay loan dues without asking them first.

After the protest, Ayyakannu told reporters that such actions by banks are causing more problems for poor farmers. He said farmers are already in trouble and need help, not more pressure. He also said the fight for loan waivers will continue until the government and banks provide proper support.

What is the Right of Set-Off?

The Right of Set-Off is a legal right that a bank has. It allows the bank to adjust or settle the money a customer owes to the bank (loan or overdraft) using the money the customer has in other accounts with the same bank.

How it Works (with Example):

Let’s say a customer has:

• An overdraft account where he owes the bank ₹50,000 (this is a debit balance)
• A savings account with a ₹75,000 balance (this is a credit balance)

In this case, the bank can use the Right of Set-Off to:

• Use ₹50,000 from the savings account to clear the overdraft
• The remaining ₹25,000 stays in the savings account

So, after the set-off, the customer’s loan is cleared, and they still have ₹25,000 left in their savings.

Important Points:

• Both accounts must belong to the same customer.
• The bank doesn’t need permission from the customer but usually informs them.
• It’s used when the customer defaults or fails to repay a loan.