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Thursday, December 02, 2021

Easy money and a matter of life and debt

Dial a number, get money at your doorstep. Sreenivas Janyala explains how a simple money-lending strategy took the form of the ‘call money racket’ in Andhra

Updated: December 22, 2015 12:00:10 am
 dial, sial and get money, money lending, money lending stratergy, money lending in india, money lending rackets in andhra pradesh, andhra money lending rackets All the borrower in Andhra had to do was make a phone call and the cash would be delivered at his doorstep — any time, any amount, but often at exorbitant repayment rates.

The Scam

Sometime in 2001-02, advertisements began to appear in Vijayawada on the local cable network and in pamphlets inserted in Telugu newspapers, promising easy money. All the borrower had to do was make a phone call and the cash would be delivered at his doorstep — any time, any amount, but often at exorbitant repayment rates. Around 2009, with the state government cracking down on micro-finance institutions in then undivided Andhra Pradesh over allegations of harassment and coercion by collection agents, the ‘call money’ money-lenders intensified their operations. Theirs was now the easiest way to get money and they soon turned predatory. The scheme was called ‘call money’ based on the nature of the borrowing — a phone call — but over the years, ‘call money’ came to represent how women were allegedly coerced to become call girls so that they could earn enough to repay the loans.
“There are allegations that women who borrowed money were forced into prostitution or were sexually exploited by the money lenders. They also unleashed musclemen or bouncers on the borrowers, forcing them to register their properties in the names of the lenders,’’ said Vijayawada Police Commissioner Gautam Sawang.
After a long run of over 14 years, the racket was busted on December 12 after a woman complained that she had borrowed Rs 1.50 lakh from a group called the `Seven Sisters’ and repaid Rs 3 lakh but the agents of the group kept harassing her, asking her to pay another Rs 2 lakh.
When she could not pay, the agents allegedly abducted her daughter and son-in-law and kept them confined for a day. Her complaint led to scores of other borrowers lodging complaints of harassment and coercion.
While the Vijayawada police busted one racket on December 12, their counterparts in Srikakulam, Vizianagaram, Chittoor, Prakasam, Guntur and Krishna districts of the state arrested over 200 people.

Last week, Andhra Pradesh Chief Minister N Chandrababu Naidu made a statement in the Assembly, saying the police had conduced raids across the state and registered 227 cases against money-lenders, including five cases of sexual harassment. The government has also ordered a judicial inquiry and announced the setting up of a special court in Vijayawada to try the cases of sexual exploitation and harassment.
The Trap
With cash just a call away, thousands of people could not resist the temptation and thus fell into a well-laid debt trap. The rate of interest isn’t fixed and depends on how desperately the borrower needs the money. Besides, the interest rate is never mentioned upfront but usually as the amount that has to be repaid for every Rs 100 that’s borrowed.

“For instance, a borrower is told the lending is at Rs 5, which means that for every Rs 100, he has to pay Rs 5 per month as interest. So if a borrower takes Rs one lakh for one year, he incurs Rs 5,000 as interest per month and ends up paying Rs 60,000 as the annual interest. That’s a lending rate of 60 per cent. Short-term loans comes at an even heftier rate of interest. Those who want money urgently end up paying 100 per cent interest rate. People with no collateral often end up paying 200 per cent as interest,’’ said Chittoor SP G Srinivas, who is supervising the investigation into several complaints.
The Lenders
Those who lend are neither registered as non-banking financial institutions nor as money-lenders but are simply a group of individuals or partners who pool in create a corpus of cash and lend. “They rarely ask for collateral but the trap is in the blank cheques and promissory notes which are used to coerce, harass the borrowers,’’ says Task Force Assistant Commissioner A V Prasad.
The borrowers

The clients could be just about anyone — real-estate dealers who would use the money to buy a prime property today and dispose it off within a week or month; businessmen faced with a liquidity crunch; gamblers who win some and lose some; even small borrowers who ask for Rs 20,000 to Rs one lakh.

The political connection
“Most of the moneylenders are linked to local political leaders, MLAs and members of the legislative council who park their black money with the moneylenders. In Vijayawada, the lenders are either related to or have the backing of TDP leaders,’’ said YSR Congress Party’s spokesperson Ambati Rambabu.
But his party isn’t above board either. In his statement in the Assembly, Naidu said 20 of those arrested were TDP members, 65 of YSRCP, 12 of Congress, six of CPI, four of BJP, 2 of Lok Satta and one of CPM.

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