E-Paper
Loan recovery musclemen turn lease goons
LOAN BORROWERS heaved a sigh of relief when RBI strictures saw about 250 loan recovery goons out of business last year! But, this year they have grown nastier like Raktabeej (a mythological demon from whose drop of blood arose another demon) by running an illegal parallel transport business.
LOAN BORROWERS heaved a sigh of relief when RBI strictures saw about 250 loan recovery goons out of business last year!
But, this year they have grown nastier like Raktabeej (a mythological demon from whose drop of blood arose another demon) by running an illegal parallel transport business.
The modus operandi has been simple: Soon after the RBI crackdown, these recovery goons got into a multi-crore private lease finance business to offer loans for commercial vehicles such as mini trucks, taxis, jeeps and tempos at high rates.
The repayment conditions would always leave the borrowers in the lurch and the finance mafia would seize their vehicle and press them into illegal transport business at the borrowers’ risk.
The mafia in local parlance, these men with unaccounted cash at hand pooled in from a wide section of businessmen who want to evade paying trade and service tax, frame their own rules of lending. The loans are offered on exorbitant interest rates (18 to 24 per cent) with a warning to use muscle power if the Equated Monthly Instalments (EMIs) are not paid on time.
An interesting aspect of these loan sharks are that they are
not actually interested in anybody getting full ownership of a vehicle.
It is another story that many borrowers with deep pockets manage to pay off the loan and take ownership of the vehicle. In most cases, as soon as a borrower starts expressing his inability to repay loans, the vehicles are snatched and put into an “illegal road transport business” using “valid permits” of the borrowers. A valid permit to operate the vehicle hoodwinks even the Road Transport officials into accepting the transport business as genuine.
“Typically, there is a brand new commercial vehicle such as a mini truck which is carrying out inter-state transport service while the genuine documents such as ownership of the vehicle and permit of the vehicle is lying with the illegal vehicle financier who had seized the truck from a defaulter and now runs a fledgling transport business”, a manager of a prominent auto finance firm told HT Lucknow Live.
In certain cases where the borrowers of loans from these illegal “lease finance shops” agree to pay the EMIs regularly, a “late fee” of Rs 25,000 is charged.These agents run the business while hiring a staff of 8 to 10 people and operate from small shops in large shopping complexes across the city, he added.
