Special drive by police nets unscrupulous moneylenders

In 2006, hard-pressed for cash, a trader in Chalai borrowed Rs. 6 lakh from a local ‘blade’, bazaar terminology for loan sharks who lend money at very high rates of interest and often use violence to recover it.

The deal nearly ruined him. Over the next six years, under severe duress, he paid the moneylender Rs 42 lakh in interest alone. Still, the ‘blade’ did not consider the principal amount paid and threatened him for more money.

The businessman’s complaint last week prompted Additional Director General of Police, South Zone, A. Hemachandran to order a special drive against loan sharks, which resulted in the arrest of at least four of them on Sunday and raids on the premises of scores of others.

Documents seized from the moneylenders showed that they often charged an interest of up to Rs.1,000 a day on a loan of Rs.1 lakh, an annual interest rate of 360 per cent compared to the nominal 12 to 14 per cent charged by banks.

Their clients ranged from the common man seeking urgent cash for treatment or conduct of social ceremonies such as weddings and funerals to those profiting from legal and illegal businesses.

The moneylenders often asked their clients to submit signed blank cheques, (preferably those issued in the name of their wives for easy coercion), promissory notes, stamp papers and land deeds as surety. In addition, they forced them to sign land sale agreements to show on record that the loan was actually an advance for the borrower’s property.

Most moneylenders kept their transactions secret and rarely registered or advertised their businesses to avoid taxes and legal scrutiny.

Last month, the police had arrested four of their own men on the charge of running an underworld-linked money lending operation in the city. They had extended collateral-free “meter” loans, where interest is charged by the hour, and used their office and underworld contacts to make borrowers pay up.

So, far the racket has taken a heavy toll on urban society. It has fuelled crime, impoverished families, and driven many to suicide.

Assistant Commissioner K.S. Suresh Kumar and Circle Inspectors Sheen Tharayil and Stuart Keeler led the drive.