Ramesh Koli, a 35-year-old farm labourer in Surendranagar district, Gujarat, had borrowed ₹30,000 from a moneylender in July 2022. In the following two months, he repaid the amount, plus ₹50,000 as interest. But the moneylender demanded ₹30,000 more, threatening him with dire consequences if he didn’t pay up. With the help of his village sarpanch (head), Mr. Koli brought the amount down and paid ₹15,000 more. “It was horrible,” says Mr. Koli of his experience. “No one should borrow from moneylenders.”
Now, the Gujarat police have launched a special drive against mushrooming private moneylenders. They have organised State-wide camps at districts, in an attempt to address the issue of harassment. “We have issued a strict instruction to every city and district police regarding action against moneylenders,” said Gujarat Director General of Police Ashish Bhatia. He added that the police are inviting people to file complaints if they had faced any harassment from moneylenders.
There have been suicides, rapes, and violence, all because private moneylenders – some registered, some plying without licences – collect illegal sums of money. The amounts far exceed the State-mandated maximum interest rate of 12% per annum from a borrower who has provided security, and 15% per annum from those who don’t give a security. There are often huge penalties on late payment and daily interest that compounds.
In Rajkot, a 37-year-old woman was allegedly repeatedly raped after her husband, an auto driver, failed to repay ₹50,000 he had borrowed from a private moneylender. She filed a case in the last week of December 2022.
In another devastating incident in Ahmedabad, in September 2022, a 45-year-old took his life. He had been harassed by a moneylender who had lent him ₹50,000 and recovered ₹5 lakh. In the police FIR registered after the suicide, his wife accused three persons who, she alleged, drove her husband to suicide, after they forced him to pay ₹18 lakh more.
“They are blood suckers,” said Surat Police Commissioner Ajay Tomar, who has invited the public to come forward to file cases against the loan sharks in the city. “In Surat, we filed 34 cases in the first week of January, arrested 31 accused, while three people are absconding,” said Mr. Tomar, who has proactively launched a crackdown against moneylenders in Surat. Economic distress here is forcing people to use the services of private moneylenders to borrow paltry amounts for their immediate needs.
Mr. Tomar said that from October to December 2022, the Surat police had filed 53 cases, several of them suo motu as the victims, often fearful of violence, were not willing to name the lenders. Many moneylenders also enjoy police patronage.
In Gujarat, the license for moneylending is issued by the local registrar who also oversees cooperative societies. According to Mr. Bhatia, the police’s role comes only after a complaint is filed, but they would like to be proactive. “We want to encourage people to come forward and file complaints,” he added.
As per the directive issued to all district police officials, cases are to be lodged under the Indian Penal Code Sections 384, 387 against lenders who lend money without registration, or above the set limit of interest rates; those found seizing properties of borrowers against loan amount, or found harassing the borrower. It also states that in circumstances where the borrower is not able to return the money and their property is confiscated, the moneylender can be booked under the Prevention of Money Laundering Act (PMLA) and the Gujarat Money-Lenders Act.
Those who require assistance for overcoming suicidal thoughts may contact Sanjivini, Society for Mental Health suicide prevention helpline 011-4076 9002 (10 a.m. to 7.30 p.m., Monday-Saturday).