GO MS No 74, Dt:18-6-15 :: Calculation of expected interest on pricipal of APGLI Loan on diminishing balance method

G.O.MS.No. 74, FINANCE (ADMN.II) DEPARTMENT, Dt:18-06-2015 :: APGLI Department – Sanction of Loan to Policyholders on their polices Collection of expected interest of Loan – Orders - Issued.

Read the following:
1. Circular Memo. No. 707/119/A2/Admn-II/2013, dt: 21-06-2013
2. Lr. No. 1/Genl/2014-15, dt: 24-02-2015 of the Director of Insurance, A.P. Hyderabad.

ORDER:
1. In the reference 1st read above, Government have instructed theDrawing & Disbursing Officers to collect the interest on APGLI Loans shall be deducted after the Principal amount has been fully recovered, calculating the same at the interest rate as informed by the Director of Insurance in the deduction orders in one or more instalments not exceeding (10) monthly instalments.  

2. In the reference 2 nd read above, the Director of Insurance (FAC), has informed that most of Drawing & Disbursing Officers are not deducting the interest amount after completion of Principal, they are deducting Principle amount only. This type of issue is causing loss to the APGLI Fund and interim to subscriber. The Accountant General, Andhra Pradesh also pointed out that the delay in recovery of interest on Loans resulting heavy loss to the Fund Account. Therefore, the Director of Insurance has requested the Government to accord permission to calculate the accruable amount of interest due, at the time of sanction of loan itself and total amount arrived thereon (Principal loan +Interest) should be deducted in Equated Monthly Instalments (EMI), from the subscriber’s salary and also instructions may please be issued to all the Drawing & Disbursing Officers to effect recovery of EMI amounts as per the specified instalments promptly.

3. Government after careful examination of the proposal of the Director of Insurance (FAC), A.P., Hyderabad hereby accord permission to calculate theexpected amount of simple interest on diminishingbalance method at the time ofsanction of loan itself, fix the E.M.I., and inform the same to the concerned Drawing and Disbursing Officers duly requesting them to recover the same which will beconsisting of principal and interest. The Director of Insurance shall see that any excess or less amount of interest so recovered is accounted and adjusted at the timeof subsequent loan or settlement of claim.

4. The Director of Insurance (FAC), A.P., Hyderabad shall take necessaryaction in the matter accordingly.

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