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Trapped in vice-like grip of money lenders
From Koyambedu market to Kollywood, usury has been plaguing Tamil Nadu for the last several years. Despite demonetisation and digitization of economy, the huge illegal money lending industry has been blatantly operating across TN.
By
migrator
migrator
Chennai
From Koyambedu market to Kollywood, usury has been plaguing Tamil Nadu for the last several years. Despite demonetisation and digitization of economy, the huge illegal money lending industry has been blatantly operating across TN.
Here’s why?
Kollywood’s association with usurers to continue
While the suicide of Ashok Kumar has brought the issue of usury to the forefront again, Kollywood insiders say that the problem is likely to continue.
A leading theatre owner and distributor on condition of anonymity said that the industry functions in a way that the system will never be transparent.
“There are 1,400 theatres across Tamil Nadu and there is a system, which is called ‘leafline’ which gives us the collections for a specific film till its theatrical run. It costs Rs 10 lakh to install this. How can a single screen theatre afford to come up with such technology? Producers in fact call theatre owners and ask them to send the collections directly to them without leaking the information,” he said.
According to him, to eradicate usurers and their harassments, actors should agree to invest their share in the film. “Producers go to financiers to pay the actors, directors and composers in crores and the film goes out of theatres in three days. These are the reasons and hence a compromise should be done from the actors’ part and not us,” he said. There have been as many as over 20 complaints filed against different usurers across Tamil Nadu by various producers and directors in November alone.
However, people from the industry say that they have to come together and bring in more transparency, that would help producers as well as the industry survive.
K E Gnanavel Raja, producer and the secretary of the Producers’ council says, “We need to bring in a rule where movies have to be completed within 40 days. Every additional day in the shelf life of a film increases the interest rate for a producer, who borrows money from a financier. We shell out huge amount of money on artiste’s conveyance charges, daily wages for the unit and equipment.
Read More: It was a harrowing experience
Imagine the cost if a movie is being shot for six months or over one year.” Vishal Krishna, tells us the reason behind why producers aren’t being sanctioned legal finance from any of the banks despite mortgaging cheques and jewellery. “It is because there is zero transparency when it comes to revealing the box-office collections of a film. When was the last time a producer or a theatre owner opened up on a movie’s collection over a weekend or a fortnight? This is why banks do not sanction us loans and we end up approaching illegal financiers. Theatre owners should arrive at a decision soon and help in making the system transparent so that such deaths do not occur again.”
Koyambedu market is highly vulnerable to usury
The Koyambedu market complex, known for biggest fruit and vegetable market in the Asia, has also become a highly vulnerable place for usury.
There are around 2,500 vegetable, fruits and flower wholesale shops in the market, which witnesses business between Rs 15 and Rs 20 crore on a daily basis. Sources said that around 100 to 150 money lenders are intruding in the market complex to collect ‘interest’ from the traders every day.
“For instance, when the wholesale traders borrow Rs 1 lakh from money lenders, they would get only Rs 90,000 after interest is deducted. The traders should pay interest of Rs 1000 regularly for next 100 days. If the traders fail to repay prescribed amount, they would be threatened, and lenders would ask them to pay extra amount of Rs 500 on next day along with the regular amount,” said a source at the market.
V R Soundararajan, member of Market Management Committee said, “Usury has become commonplace in the Koyambedu market complex. Sometimes, traders, who are unable to pay the amount, are being humiliated by such lenders while business is affected due to usury.” He observed that after a couple of suicide incidents due to usury, the number of lenders took a dip and however, such incidents may continue again.
“We have also asked the traders to approach Marketing committee to complain about usury,” he added.
Police cracking down on usury
but it is too vast an industry Though the Tamil Nadu police went on crack down mode after a family of four committed suicide by setting themselves on fire to escape from the clutches of usury last month, the fact remains that the usurers run a parallel economy in the state.
“Each district police head was asked to identify private financiers who lend money on high interest. So far more than 200 cases were booked across the state. In Chennai alone 11 cases were booked in the last six months and six persons were arrested.
But the fact remains that the people approach these Kanduvatti fellows to run their daily business,” a police officer noted.
A officer said that even if they are aware, they have no other option than depending on such usurers, as banks will not give you loan on trust alone. “As far as Kanduvatti men are concerned, if you are good at repayment, they trust you. If you are a defaulter, they think twice before giving you the money. This rule applies from Koyambedu market to Kollywood,” the officer said.
NO LET-UP IN CASES
- Over 20 complaints filed against usurers across Tamil Nadu by various producers and directors in November alone.
- Around 100 to 150 money lenders do business at the Koyambedu Fruit and Vegetable Market complex collecting ‘interest’ from the traders every day.
- So far more than 200 cases were booked by police across the state. In Chennai alone 11 cases were booked in the last six months and six persons were arrested.
- RBI guidelines issued circular on lending to MSME Sector (para 4.2) dated July 01, 2014, in respect of loans upto Rs 10 lakh, says banks are mandated not to accept collateral security in the case of loans upto R 10 lakh extended to units in the Micro Small Enterprises (MSE) Sector
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