Under debt, this clerk has postponed his marriage

Sahid Parvez (37), a clerk in state-owned Central Coalfields Ltd, generally walks his way to office or when he feels rich rides an ageing two-wheeler.

Sahid Parvez (37), a clerk in state-owned Central Coalfields Ltd, generally walks his way to office or when he feels rich rides an ageing two-wheeler. He lives in a cramped two-room house and borrows daily newspapers to keep himself abreast with the latest in the world. He may be just another Sunni Muslim, but what is striking about Parvez is his credit history as reflected in the files of LIC Housing Finance Ltd (LHFL) that lent Rs 2.90 lakh, facilitating the purchase of his dream home. But, now, he is in a debt trap, a feature not so uncommon among employed youths in Jharkhand today.

However, he is not ready to talk about it. When pressed, he says: “Despite being aware that taking or giving interest on debt is prohibited by Islam, I took a loan to buy a house of my own. It is only after I have landed myself in deep trouble that I realised the significance.”

Parvez had no ancestral property to fall back on. The responsibility of educating his younger brother, Sajid (24), a student in a private college offering diploma courses, was squarely on his shoulders after his mother and father G M Haider, a technical staff in Central Coalfields Ltd, passed away in 2001.

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Parvez’s LHFL file (a copy of which is with The Indian Express) tells the story of a tier-2 or tier-3 city youth forced to postpone his own marriage, among other sacrifices, after his home loan tenure got extended, following a steady increase in interest rates.

Four years ago, he mobilised Rs 1 lakh from his savings and planned to build a house over 8,000 square feet by taking a Rs 2.90 lakh loan. With a tenure of 20 years and an EMI of Rs 2,340, LHFL projected that he would clear the loan in 2024, seven years before he retires in 2031. But the latest figure incorporated in the file indicates he will not be free from the debt before 2041 when he will be 70. “This is what nobody can dispute,” said LHFL’s agent Subhash Singh, who processed and got his loan application approved.

LHFL reviews the interest rate every three months (January, April, July and October), based on the prevailing market conditions. Parvez took the loan at a 7.5 per cent floating rate. Four years down the line, it had gone up to 10.75 per cent and the tenure of his loan was stretched to 2041.

Not once did he default during the past fours years. Parvez had paid EMIs amounting to Rs 70,322. Still the total amount deducted from the principal was a meagre Rs 26,421 as on April 1. This means he carries a burden of more than Rs 2.63 lakh even today.

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To wriggle out of the debt, Parvez can sell this house whose value has appreciated to Rs 7 lakh. But even this is not going to provide him relief, as he has already spent over Rs 6 lakh (Rs 1 lakh saving, Rs 2 lakh for the land, EMIs of Rs 70,322 and unpaid principal of Rs 2.63 lakh).

Parvez’s brother Sajid is keen to do his bit. “To lighten his burden, I badly wanted to take up a job,” he says. “But I can’t because I still have four semesters to go before I complete my diploma course in hotel management.”

So, Parvez doesn’t have any plans to get married for some time now. “I can marry only after my brother gets employed,” he smiles.

Tomorrow: Chartered Accountant with an MNC breaks fixed deposits to tide over loan crisis

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