Illegal financiers are in for the kill

Illegal financiers are in for the kill
Highlights

Illegal Financiers Are in For The Kill. Syed Mukhtar, an autorickshaw driver from Talabkatta, took a loan of Rs 50,000 a couple of years ago from an unregistered financer.

  • Private unregistered financiers are doing business worth Rs 30,000 crore a year
  • Government is losing taxes worth Rs 150 crore
  • They employ goons and musclemen to recover loans and even seize property from the defaulters
  • After the 2012 crackdown on private financiers, their business is again thriving

Syed Mukhtar, an autorickshaw driver from Talabkatta, took a loan of Rs 50,000 a couple of years ago from an unregistered financer. He pledged his auto as collateral (re-finance) to perform his daughter's marriage. He ended up paying a total sum of Rs 80,000 along with interest. Later he took another loan of Rs 10,000 for purchasing furniture. The financer asked him to pay a sum of Rs 20,000 including interest to settle the loan. When Mukhtar defaulted on the payment, he was beaten up by goons of the loan shark and his auto rickshaw was confiscated. Now he is working as a security guard at an auto garage in Bhavaninagar.

Illegal financiers  are in for the kill

Illegal finance market is thriving in the city. Rough estimates put the business at Rs 30,000 crore per year. These private financiers are wrecking the lives of auto-rickshaw drivers, petty traders, fruit vendors and daily wage earners. Even the educated middle class are falling prey to them. The financiers run illegal business unopposed enjoying the political and money clout. Hardly five private financiers have permission from the RBI and the government to transact business. But as many as 300 private finance firms have set up shop across the city.

These financiers are thriving on ever increasing automobile sales. Rough estimates say that about 60 per cent of vehicles are financed by unregistered private financiers. They conduct business without any offices. The modus operandi is through middlemen, auto consultants in particular. Despite the government losing Rs 150 crore yearly through taxes, no action has been taken on these financiers, as they allegedly have the backing of political bigwigs.

People generally approach these private financiers as they don’t undertake stringent verification and don’t take huge processing charges. The interest usually ranges between Rs 2.50 and Rs 3 per Rs 100 while banks and registered institutions charge anywhere between Rs 5 and Rs 7. It is all a pretty picture until you meet the installment deadline. The recovery agents with these private financiers come out when you falter on the installments.

According to law, a financer has to serve three notices to the defaulter. He can seize a vehicle only through a court order. But these private financers do not go by the rulebook. If the payment is delayed even by a day, they seize the vehicle, wherever they spot it. It would not be released until the owner of the vehicle pays the installment along with the penalty and interest.

In case the owner fails to make the payment, the vehicle would be confiscated and its ownership would be transferred to the financier’s name through his contacts at the Road Transport Authority (RTA).

Victims allege that a few RTA officials are hand in glove with the financers. The rulebook says that finance can only be done to a new vehicle or when the vehicle’s ownership changes. Re-finance (financing the same vehicle after the loan is cleared) is allowed only thrice. But there are cases where an auto purchased in 2001 has been financed and refinanced 13 times.

It is reported that these financiers employ rowdy-sheeters as their musclemen who sometimes rough up the defaulters. There was a crackdown on these illegal financiers back in February 2012. As many as 77 financiers were arrested and 72 cases were booked. But that sadly was the only action that was ever taken.

These private financiers seem to be hardly concerned by the methods they adopt.

“People approach us for finance as we don’t demand much documentation like others do. We don’t even ask for collateral, we go by trust. But if someone defaults on the payment, we have to get it. After all we are in this business for our survival,” remarks a private unregistered finanicer.

Show Full Article
Download The Hans India Android App or iOS App for the Latest update on your phone.
More Stories


Top