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Many in Mhaisal end up paying 100% interest to private money lenders
Money lenders in Mhaisal are charging 100% interest from small households, marginal farmers and labourers
PUNE: After nine members of a family at Mhaisal in Sangli recently committed suicide owing to harassment by the money lender to repay both the principal and interest of the loan they had availed from him, the Sangli police have arrested 15 out of the 25 persons against whom an FIR has been filed in the case. However, with the spotlight now on private money lenders tightening the noose around the necks of Maharashtra’s farmers, similar such cases are coming to light.
One such is Hemant Shinde, a villager in Mhaisal, who borrowed Rs10,000 from a local money lender for the medical treatment of his wife in April, agreeing to repay Rs20,000 along with interest in May after receipt of his monthly wages. But he failed to repay the amount and the money lender is now asking him to pay Rs40,000 after 100% interest rate, which is almost 10 times more than banks and credit cooperatives. According to Shinde, borrowing from moneylenders is quite simple as compared to borrowing from a bank which involves a lot of paper work but this is just a trap laid by private money lenders to ensnare people like Shinde.
Appa Katwate, another villager who migrated to Mhaisal from the Solapur district and works as an agricultural labourer there, borrowed Rs5,000 from a local money lender in the last week of May and agreed to repay Rs10,000 along with interest in the subsequent week. But because his wages were delayed, he failed to repay the said amount on time after which on last Saturday, the money lender asked him to repay Rs30,000. Now Katwate is scrambling to arrange the money to repay the loan. Katwate, too, said that the hassle-free process of borrowing lured him into taking the loan from the private lender despite the interest rate being much higher.
The problem extends beyond Shinde and Katwate to many small households, marginal farmers and labourers in Mhaisal where local money lenders are charging 100% interest. Such lending by private money lenders is resulting in a debt trap where, according to villagers, some lenders are lending even small amounts for a period of one week or one month by charging 100% interest. This is tantamount to fleecing the poor and impoverished people in the village.
Former MP and Swabhimani Shetkari Sanghatna (SSS) leader Raju Shetti said, “The government should question as to why the poor prefer taking money from private money lenders and not the bank, even after they are charging huge interest rates. Existing banking system is established to fund only to business tycoons.”
He further said, “Considering financial condition of rural poor, we have to change our existing lending system to accommodate rural poor.’’ To deal this issue either government need to increase income of rural poor or to make changes in banking system so that rural poor can easily avail loan without any hurdle, Shetti suggested.
Asked about the problem, Mhaisal sarpanch Rashmi Shinde, said, “Yes, we are working to curb this illegal lending but we don’t have much in our hand. After the recent incident, we have decided to create awareness among people about such illegal lending. We are appealing to people to come forward and lodge a complaint if any lender is torturing or harassing them.”
Not only Mhaisal, adjoining villages in Sangli, too, are notorious for the existence of such money lenders who are ready to lend within minutes, no questions asked, but at 100% interest rate. So much so that there are money lenders in Mhaisal ready to lend even for a single day. According to villagers, this kind of lending is causing a boom in gambling in the village. The private money lenders are encouraging gambling so that gamblers can approach them for more and more money. This often results in fights and loss of lives.
Senior police inspector (crime) from Miraj police station, Ajay Sinkar, said that it is true that money lenders are charging huge interest from poor and needy people and exploiting them. “But we too are bound by rules and regulations. We can take action only after we receive complaints against anybody,” said Sinkar. Sinkar appealed to people to directly approach the local police station and lodge a complaint if they are being similarly exploited.
Many of these lenders do not even have the necessary permission to sanction loans and are doing so illegally. The business of illegal lending has been going on unabated due to lack of strict measures. This is a vicious circle in which poor people are suffering the most and ending up losing their life’s savings. Notwithstanding, the district administration and police force are still to take strict action to safeguard the borrowers.
