Old city in the grip of loan sharks

The tragic death of Sameera spotlights yet again the growing tentacles of loan sharks in the old city. The plight of Sameera’s family is only the tip of the iceberg. There are hundreds of such families silently suffering harassment and humiliation at the hands of the moneylenders. Abuses and threats are passé. Musclemen employed by the moneylenders confine and even torture the borrowers when they default in repayment.

Of late there is a mushroom growth of microfinance companies in the old city, most of them unregistered. Money is available for the asking. In fact the unscrupulous moneylenders employ agents to scout for possible borrowers. It is mostly daily wage earners and petty business men who take the bait – hook, line and sinker. For the small loans of Rs. 5,000 to Rs. 10,000 they end up paying double and treble the amount sometimes.

The ‘short duration’ lending is playing havoc with many a family even as the moneylenders are making merry.

According to one estimate there are 50 to 60 private financiers in the south zone. They charge fancy rates of interest, often 20 to 30 per cent, depending on the pressing need of the borrower. No, there is no paperwork involved. The whole thing is conducted orally and as such complaints are few when things go wrong.

The usurious moneylenders have a roaring business in areas like Talabkatta, Aman Nagar, Shaheenagar, Yakutpura where there is abject poverty. There is what is called daily finance where small loans are taken in the morning and repaid in the evening at exorbitant rate of interest ranging from 10 to 20 per cent.

There are no idle threats with the moneylenders. In case of default, household articles are confiscated and physical attacks carried out. “Sometimes the borrowers are confined in a room and tortured. Absence of effective law has only emboldened the financiers,” says Amajadullah Khan, former MBT corporator.

Lack of easy access to bank credit has worsened the situation in the old city. “People here have no alternative but to approach the private financiers,” says Prof. Rehana Sultana of Maulana Azad National Urdu University who tended Sameera at the Osmania General Hospital.

The reluctance of banks to advance loans and the long process involved is a big deterrent. “Despite tall claims credit to poor is very limited and expensive. For their survival they pay more interest than the rich for luxury,” says Mazhar Husain, director, COVA.

Mallik Mottasam Khan, president, Jamaat-e-Islami Hind, Andhra Pradesh, feels the government ought to provide easy loan facilities for the minorities. He also wants the well-to-do members of the community to help out the poor and needy.