Liquor auction fuels demand for private loans

Vizianagaram: The new liquor policy launched by the NDA government has triggered frantic efforts by prospective bidders of liquor shops for finance. As per the norms of the new policy, the applicant for retail shop has to pay Rs2 lakh towards application fee and one person can submit any number of applications by paying Rs2 lakh each. After receiving applications for 3,396 shops across the state, the draw will be conducted on October11, those who got licence can operate shops in their respective jurisdiction.

Now the interested liquor traders are making arrangements to submit application for shops. The licence fee for each year would be from Rs50 lakh to Rs85 lakh based on the business potential and population in the location of shop. But the licence holder has to pay one third of the amount soon after getting the shop in lucky draw. It means every applicant should hold minimum of Rs25 lakh hard cash to operate shop. Hence, the applicants are leaving no stone unturned to mobilise money from friends, near and dear by offering high interest or partnership in the business.

Naturally, many are flocking to private moneylenders to garner the required amount.

Private moneylenders who give loans on security of properties charge interest of 24 percent per annum but now due to high demand for funds, they are collecting higher rates.

The desperate applicants are even agreeing to pay Rs8-10 interest per month.

It means if a person takes Rs10 lakh of loan from a private lender, he has to pay around Rs80,000 towards interest per month.

The interested applicants are putting their efforts to acquire funds from their family members by offering huge interest or share in the shop. Vizianagaram has 165 shops while Manyam has 58, Srikakulam 180 shops in this region.

The applicants are mortgaging property documents, ornaments, flats andplots to money from the lenders for mobilising finance.

A liquor trader from Gajapathinagaram said, “I am planning to submit my application in a lucky draw and searching for money. I asked my friends, relatives but it is not enough. So, I got some more funds from a private moneylender at high interest rate. We have a no choice in this regard as we are in emergency situation,” he said.