Wednesday, 31 August 2016

The great escape from the loan sharks!!

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Loan sharking refers  to illegal and predatory lending business that charges  extremely high interest rates and in many cases the interest charged  is  3 to 4 times that of banks. Loan sharks, if the loan payment is delayed, will resort to  blackmail or threats of violence. Historically, many money lenders go against the government  rules, despite the enforcement  of usury laws.  In the western world, loan sharking has been  part of the syndicate or the criminal underworld.


The loan sharks are a menace to the society and  their contribution to the community is just zilch. They are known to be merciless and notorious, using  various unethical, violent methods to recover loaned money from the defaulting borrowers through  extortion, kidnapping, threatening family members and finally murder. In some towns in India, they hold the children hostage till the money is returned fully. Their nefarious activities still continue unnoticed and unabated  as the usury laws in the US, India and in many countries  have a lot of holes in them. In India, the main victims of loan shaking are  daily wage earners, farmers or small business people who are being harassed and fleeced  by them.

When there is an urgent need for liquid cash, or capital, the loan sharks  are the  best bet. No red tap-ism, no delay and there is an easy access to money. Though the investment and trade opportunities don't wait, taking a loan from the loan sharks is highly risky, as the exorbitant interest rates will negate the process of the business. As for India, banks don’t follow a realistic system to assess  either the borrower’s vision or his entrepreneurial skill or the viability of his product. A  good example is Vijay Mallaya, the liquor baron from Bangalore, Karnataka who is at large and owes more than Rs.900 crores to Indian  banks.The loans were sanctioned when Mallaya's financial track record was not good and obviously, the big loans had turned sour.

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I would like to recall a small story my dad told me about money lending when was in my final undergraduate year long ago. Once a smart man in a small Indian town, under compelling circumstances, got a loan from a ruthless money lender, who was a terror to the local people. A few months later he neither paid the interest nor a part of the principal loan amount. Infuriated as he was , the money lender sent his muscle men to bring the borrower to him. His men had searched the entire house almost daily for a few weeks; the borrower was very much in the house, but there was no sign of him being in the house. The money lender,having failed to collect the loan almost gave up on him and was terribly upset. One cold midnight  the borrower and his wife gave a slip, fled the town and safely settled down in a far off place.
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After a few years the borrower's friend accidentally ran into him in the same  town where he had been living and asked him, “You were very much in the house, how did you evade that vicious money lender and his men when they were looking for you in your house?'' The borrower said,”My wife and I devised a plan to hoodwink the vicious money lender. The moment his men got into our street, she would signal me at once and I would go to the back of my house where there was a big half covered water tank. I would go
underwater and stay there until the money lender's men
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left the place. To keep myself alive I used a snorkel through which I could breathe for a while and it worked well for me. On hearing this weird method of hoodwinking a notorious loan shark,  his friend stood there tongue-tied. What an ingenious way to escape from life-threatening money lenders!!