More and more victims file insolvency petition
MADURAI: ‘Kandhu vatti’ or ‘meter vatti’ (as usury is known in local parlance), a form of lending at very high interest rates, is active in Madurai and a few towns in southern districts.
Most of the small and marginal vendors, unable to repay loans owing to exorbitant rate of interest, are approaching courts seeking insolvency.
A few among them have sought police assistance following persistent threats, which gives room for ‘katta panchayat’ at police stations, non-governmental organisations working to protect the victims say.
According to some advocates, the number of insolvency petitions (IP) filed in 2007 in Madurai court was 94, while it is 85 (including five women), till September this year.
Many of the petitions were filed by individuals who had taken loans from money lenders at ‘unbelievable’ rates. Some among them had taken loans from banks and after suffering huge losses in their business, they moved the court seeking IP. A few other petitioners were unable to repay the deposits owing to various other reasons.
A petitioner had stated that he borrowed Rs. 1 lakh from a money lender in 2005. The lender initially took Rs. 10,000 as interest and paid Rs. 90,000 to the borrower.
He had to repay Rs. 1,000 a day for 100 days. Any delay or break in schedule would attract penal interest, which ranged from as low as Rs. 200 to Rs. 1,000, he was warned. As the petitioner was unable to repay the loan, he approached the court.
Another recent case is that of a 27-year-old vegetable vendor in Madurai. He had borrowed Rs. 6 lakh from as many as 12 lenders at exorbitant rates. According to the petitioner, though he had repaid Rs. 13 lakh in total, the money lenders insisted that he owed them around Rs. 5 lakh more.
Seeking justice, he had submitted a petition to the Commissioner of Police, Madurai city, for intervention and also moved the court seeking IP, the advocate added.
Advocate Abudu K. Rajaratnam said that an uncontrolled, parallel financial system prevailed in many cities. The State had the responsibility to check the menace. People took loans from money lenders out of despair. In spite of many court orders coming down heavily on these illegal dispute settlements, usury practice thrived. The police should deal with such acts with an iron hand, he added.
A senior police officer in the Economic Offences Wing said that after introduction of the Tamil Nadu Prohibition of Charging of Exorbitant Interest Act, the menace was under check, but admitted that it continued to be on the higher side in cities such as Madurai and Salem.