In 2009-10, Andhra Pradesh was beset with series of suicides from unregulated microfinance institutions and finally the state government cracked the whip on them that only regulated RBI-registered microfinance institutions operate out of Andhra Pradesh now. In fact, major banks have refused to lend money to any microfinance institution for operations in Andhra Pradesh even now.
While the 2010 crisis has driven out the major microfinance institutions away from the state, dubious money lenders have entered the financial services market to fill the gap and the product on rage now is called "Call Money". Clients are just given loans at the call from a phone, making it too easy and tempting for many to fall for it. The agents visit home, offer cash and get signature on a promissory note.
The modus operandi is such that the money lenders have all the information about the called whom they are lending the money. When they fail to pay instalments, collection agents descend on their homes, ill-treat women and give the client a taste of harassment. When the harassment becomes unbearable, one family in Chittoor recently committed suicide.
The operations of the "call money" rakcet have no political barriers as both the ruling Telugu Desam Party and the opposition Congress party leaders are behind the process. The operators frequently drop in the names of local leaders of both the parties and no word of caution has come from the top leadership.
While the police in Vijayawada finally broke silence to arrest some of its ring-leaders in Vijayawada, the reports said leaders from both the ruling and opposition Congress parties have been pressing the police not to go ahead with charges further. Alleging big racket, the opposition YSR Congress has staged protests and sought immediate action against these "Call oney" agents.
Capping series of incidents, four members of a family committed suicide on Thursday morning giving a jolt to the entire saga of loan sharks. Siva Kumar, 36, of Diguvanagulavaripalle village in Chittoor district, took his family to nearby Sitamma lake where they jumped into it and committed suicide. Villagers later recovered their bodies and police have begun probe into the links of call money racket again.
Soon, two women reportedly attempted to commit suicide elsewhere in the state but saved, said the police. The gigantic racket has brought to life the erstwhile suicides of 2009 and 2010 when microfinance companies came under scanner for similar reasons.
What is Call Money?
Like call girls few decades ago, call money is just a phone call away. Erstwhile moneylenders have tranformed into ‘Call Money’ agents who visit the borrower’s house to give him cash and get his sign on promissory note. The interest charged is a whopping 120% to 200%. When borrowers fail to repay, they send goons to threaten them inside the house, harass women and in some cases they have reportedly exploited women sexually in lieu of interest payment.
While both TDP and Congress leaders are allegedly behind the racket, police have recently woken up to book cases against the infamous incidents. One woman by name Patamatain Vijayawada resisted the threats and lodged a complaint last week when she was forced to pay Rs 6 lakh for a Rs 1.5 lakh loan she had taken. Three persons were arrested, including Buddha Nageswara Rao, the elder brother of TDP MLC Buddha Venkanna, was arrested while four others are still absconding in the case.
Now, the Chandrababu Naidu government has ordered a judicial commission to probe the infamous racket. The commission will also probe the alleged sexual exploitation of women borrowers in some cases. Another case where police inspector himself turned into call money agent came to light in Tirupathi and he had allegedly threatened the woman that her children would be sold off in Mumbai red light area.
So, the root cause of the problem in Andhra Pradesh is that no credible icrofinance organisation wants to work in the state and it is open to unscrupulous money lenders to exploit the unbanked poor households.