Underworld-linked moneylenders in the district are extending their illegal trade to the Gulf, according to the police.
These loan sharks transfer huge amounts of money to their Gulf-based agents through illegal non-banking channels (hawala). The agents then disburse the money as high interest loans to low-paid migrant workers in foreign labour camps.
They collect the passport of the borrower, their employment contract and a signed “blank” agreement paper as guarantee. They employ gangsters to bully families of defaulters and settle Gulf-based disputes in Kerala.
Illegal moneylenders flourish in the district under the patronage of criminals and, allegedly, a section of the police and politicians. Settling money lending disputes at police stations is a major source of corruption in the force. This is perhaps why the police do little to enforce the provisions of the Kerala Money Lenders Act, 1958, despite regular circulars from its headquarters, officials say.
According to Income Tax department investigators, moneylenders backed by gangsters extend collateral-free “meter” loans where interest is charged by the hour.
For long term loans, moneylenders demand signed blank cheques and promissory notes and title deeds of landed property as security to ensure that borrowers consent to their usurious lending rates. They defraud borrowers by writing a higher amount on cheques to create an impression that the debtors had entered the details at the time of taking out the loan. Loan sharks often coerce borrowers to sign land sale agreements as security to falsely show on record that the loan was an advance payment they had made for buying their client's land. They use such documents to claim the property of borrowers who default.
Loan sharks keep no record of their business. They rarely register or advertise their business to avoid taxes.
IT sleuths had raided the houses of several loan sharks in the city this year. However, the trade shows no sign of waning. The racket has taken a heavy toll on society. It has fuelled crime, impoverished families and driven many to commit suicide.
