Five years ago, when I first heard of the local money lender and his alarming interest rate of 120%, I could have never imagined that the day would dawn when I found him almost 'likeable'.
I have often held that my years discovering the India of urban slums has been a huge lesson in life, where many of my set ideas were not only questioned but sometimes even reversed.My first encounter with our moneylender's ways was when I realised that he not only lent at 120%, but sent his goons to collect his monthly pound of flesh on each payday without fail. I was appalled and set out explaining to people that this was illegal and that there were institutions that lent money at sensible rates. Of course at that time I did not realise that poor slum people could never walk into a bank, let alone apply for anything.
The years went by and so did the moneylender and his ways. I often heard about his having given the few paltry rupees in the dead of night when someone's misguided child had been taken by the cops, or his having disbursed the needed money to buy eats for a visiting marriage party.Whenever we could, we used to help people in need, but never had sufficient funds to do so on a sustained basis. I often wondered why this seemingly absurd system did not stop and kept thinking of alternatives.
Last month one of my team members told me he had applied for a loan from a known bank and the interest rate was 2%. seemed fair to me who does not have a head for financial affairs. After much form filling, telephone checking and too's and fro's, he was given 25 K or so for a 30 K loan.I then ventured to ask Amit to find out what all this actually meant. To cut a matter short, our colleague who is barely literate had signed on a paper that would make him pay almost 55 K for his 30 K amount, and for an insurance policy of 3 K per year, something he had not wanted. The financing in the name of a leading bank was one of those agarwal sweet kind of things where leading companies give their name to middle men.
It was another transition from feudal lord to babulord. From human money lender to institutionalised money lender. I did start by saying that to me the former seemed more likeable. Well let me tell you why. Our local money l;ender at his astronomical lending rate hounds you mercilessly for year one, then a little less harshly in year 2, and normally lets people go in year 3 as he has recovered more than enough. The bank will drag you to court and hound you till kingdom come. With the former it is a clear and well understood operation, the later is full of hidden traps that simple and illiterate people fall for.
Wonder where the solution lies
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