In recent years, the state of Gujarat has witnessed a disturbing trend – a rise in cases of harassment, exploitation, and violence perpetrated by private moneylenders. What begins as a simple loan transaction too often ends in tragedy, with borrowers driven to despair, and in some cases, to the ultimate act of desperation – suicide. Their cries for help made former Police Commissioner of Surat, (now) retired IPS officer Ajay Tomar, take firm steps towards the issue.
Indian Masterminds exclusively spoke with Mr. Tomar and the current DCP (Law and Order) of Surat, Ms. Rupal Solanki, to understand more about the vicious cycle.
PREDATORY PRACTICES
After realising that the citizens were afraid to approach the police in such cases, Mr. Tomar initiated a secretive data of moneylenders in Surat and checked with the government if they were registered or not. Only the registered ones were eligible to lend money to people at a fixed third term interest rate and not beyond that.
“In any case, they are not allowed to charge more that 1.5% per month, making it 18% per year, which was the maximum interest in case of unsecured loan. These interest rates are prescribed by the government,” shared Mr. Tomar.
He came to know from the complainants that despite being unregistered, these moneylenders were charging interest rates as high as 2%, 5%, and even 20% per month from them. The victims were not able to pay such exorbitant rates, forcing them to become bonded labourers in a way.
VICTIMS OF EXPLOITATION
Numerous heartbreaking stories emerged, showcasing the plight of borrowers victimized by unscrupulous moneylenders. Ramesh Koli’s case from Surendra Nagar district exemplifies the ruthlessness of these lenders. Despite repaying his loan principal and an inflated interest amount, he faced relentless demands for further payments under the threat of dire consequences.
The horrors extend beyond financial exploitation, with cases of physical violence and sexual abuse surfacing. In one instance, a woman from Rajkot was subjected to repeated rape after her husband failed to repay a meagre loan of Rs. 50,000. Such incidents underscore the brazen disregard for human dignity exhibited by these lenders.
Tragically, the despair caused by unmanageable debt drove some borrowers to take their own lives. In Ahmedabad, a man succumbed to the pressure of insurmountable debt, leaving behind a grieving family.
CALL FOR ACTION
Recognizing the urgency of the situation, Mr. Tomar and his team launched a concerted effort to curb the activities of predatory moneylenders. Special drives were initiated to crack down on unlicensed lenders and those flouting interest rate regulations. Moreover, district authorities were instructed to proactively address cases of harassment and exploitation, offering support to victims who may fear reprisals for seeking assistance.
“Stringent legal measures are being pursued to hold accountable those responsible for preying on vulnerable borrowers. We have been empowered to register cases under relevant sections of the Indian Penal Code, targeting offenders who engage in illegal seizure of property or resort to intimidation tactics,” current DCP, Ms. Solanki, shared with Indian Masterminds.
Additionally, the enforcement of the Prevention of Money Laundering Act and the Gujarat Money-Lenders Act serves as a deterrent against illicit lending practices.
LOANS MADE EASIER
Once the usurpers were cancelled out from the market, it became difficult for the needy to take loans which was necessary for their daily hawking businesses, health issues in the family, marriage of the family members, and other such cases.
“We organized meetings with the management of commercial and cooperative banks along with studying government micro finance schemes like SVANidhi. We discussed with the bank officials to meet the demand of micro finance of needy people,” Mr. Tomar told Indian Masterminds.
Some of the banks agreed to it, and till now, almost 100 crores worth of loan has been sanctioned to the people. The best part is that the banks’ recovery rate is almost 100%. Poor people are paying back their instalments timely, thus reassuring the bank management too.
Wherein only 17 people had applied for registration as money lenders in 2022, almost 100 people had applied for registration after Surat Police’s drive in 2023, within the first two months itself. These people knew that the police would come down heavily on them if they start overcharging.
“In a way, we were able to give a comprehensive solution to the needy. The banks are happy, the poor are happy, and only the moneylending sharks are troubled,” Mr. Tomar said.
The harrowing tales of exploitation and tragedy emanating from Gujarat’s private moneylending sector demanded urgent attention and concerted action. With the collaboration of regulatory authorities, law enforcement agencies, and civil society, the Gujarat Police was able to successfully dismantle the predatory networks that thrived on the misfortune of others.
