Even several months after launching the Mudra bank scheme to help small-time vendors, traders across the state continue to source funds from usurious money lenders on a daily or even hourly basis to run their businesses.
While some claimed that even now the usury menace continued with the support of local police and government officials, others argued that with no banks or private firms ready to lend them money without collateral security, usury was a ‘necessary evil’ that helped them survive.
S Meenakshi who works at Koyambedu market said vendors needed Rs 1,000 to Rs 5,000 around 2 am or 3 am before the vegetable loads from various districts reached the market.
Money lenders deducted 10 per cent of this principle sum, gave the remaining to buy the products and once the sale was completed they returned the principal along with 20 per cent of their profit in the evening, he added.
But the traders in Koyambedu speaking to Express said the problem would begin when they were unable to repay because of low sales, K Sanjai, who owns a vegetable shop and studies for UPSC exam at the shop said that as the usury syndicates, basically comprising politically influential locals using unaccounted money, were powerful, small-traders don’t prefer police complaints fearing reprisal. It was not only vendors, but manual workers, hawkers, college students, auto drivers and even corporation sanitary workers who borrowed small sums.
The lender took away jewellery, two-wheelers, TV etc from the defaulters’ home when they were sure that the money would not be repaid, Sanjai added.
Calling it indispensable, the general secretary of Kongunadu Makkal Desia Katchi (KDMK) who has been supporting usury said it shouldn’t be looked at in terms of rate of interest as the time period associated with the process was low. For instance if a trader borrowed Rs 1,000 and paid Rs 100 as interest, the interest rate (120 per cent) might seem high compared to banks (13-16 per cent) or private finance rate (24 per cent), but they would repay it the same evening or in a week in case of small amounts, he added.
A moneylender from Koyambedu said the lenders see them as investment partners and traders as working partners.
It was not just businesses, but even in emergencies the local usurers lend money without any surety despite the risks as police immediately arrested them under the Goondas Act if a case was case filed against them, he added. KDMK Eswaran said the Mudra bank scheme has not reached the masses yet in Tamil Nadu and if the usury practice that did not affect 95 per cent of stakeholders was opposed without understanding the ground reality the economically weaker sections would suffer. The State government should create small-scale finance counters to lend money up to Rs 10,000 without any collateral at low interest rate, he added.