private money lending market and borrowers’ … · 2002-03. the share of moneylenders in total...

PRIVATE MONEY LENDING MARKET ANDBORROWERS’ SUICIDES:

A PROJECT BASED ON THE PRESENT ECONOMIC MILIEU INKERALA

Final report of Minor Research Project

Completed with the financial assistance of

University Grants Commission

South Western regional Office

Banglore – 560009

Under XII Plan

Submitted by

Dr.K.Sravana

Assistant professor

Post Graduate & Research Department of Commerce

Government College Madappally

[Accredited by NAAC B+]

Vadakare, Kozhikode, Kerala.

December 2017

STATEMENT BY THE INVESTIGATOR

I hereby state that the Final Report entitled “Private money lending

market and borrowers’ suicides: A project based on the present

economic milieu in Kerala” is the record of bonafide research work

carried by me with the financial support of UGC-SWRO, Banglore under

the XII plan during the period 2015-2017. I further state that this research

work has not previously formed the basis for the award of any degree,

diploma, fellowship or any other similar titles to the best of my knowledge

and belief.

Dr.K.Sravana

Assistant Professor of Commerce

Place:

Date:

Counter signed by Principal

ACKNOWLEDGEMENT

I put forward my gratitude to University Grants Commission, South West

Regional Office, Banglore, for giving me financial assistance for doing this Project.

Also I thank the officials of financial and non-financial institutions, for their timely help

during the period of the project.

I express my indebtedness to the borrowers and money lenders for giving me

details of the present system.

With love I place my sincere gratefulness to Prof. K.P.Ramachandran, Head of

the Department of Commerce, S.A.R.B.T.M. Government College, Koyilandy,

Prof.O.K.UdayaKumar, Head of the Department of Commerce, Government College,

Madappally and Prof.Chitralekha, Principal, Government College, Madappally for

their unstinted support to submit my Project on time.

I thank all my colleagues in the Post Graduate & Research Department of

Commerce, Government College Madappally and Department Commerce,

S.A.R.B.T.M.Government College, Koyilandy.

I am immeasurably indebted to Dr.M.A.Joseph and Dr.A.K.Sarada, for teaching

me the basic lessons of doing research.

I thank the almighty who showered his grace to make this Project a grand

success.

My heartfelt thank to my husband, son, parents, sisters, in-laws and friends for

their support and enlightens for successful completion of the Project. I am highly

obliged to those who have helped me directly and indirectly in making this project a

successful one.

Dr.K.Sravana

CONTENTS

CHAPTERNo.

TITLE Page No.

1 INTRODUCTION

2 REVIEW OF LITERATURE

3 INDIAN FINANCIAL SYSTEM: AN OVERVIEW

4PRIVATE MONEY LENDING MARKET IN KERALA

5LEGAL FRAMEWORK AND GOVERNMENT INTERVENTION

6 DATA ANALYSIS AND INTERPRETATION

7 FINDINGS, SUGGESTIONS AND CONCLUSION

BIBLIOGRAPHY

APPENDICES

LIST OF TABLES

Table No. TITLE Page No.

6.1 Age of Respondents

6.2 Size of the family

6.3 Source of income

6.4 No.of current loans from money lenders

6.5 Size & types of loans from money lenders

6.6 Other loans

6.7 Reasons why respondents borrowed from money lenders as against other forms of credit

6.8 Reasons for taking out loans from money lenders

6.9 Factors precipitating borrowing from money lenders

6.10 Reasons why respondents access to banks & other Credit institutions

6.11 Consequences of missing a repayment of loan

6.12 Feelings about loans money lenders

6.13 Result of factor analysis

6.14 Result of One-Way ANOVA

LIST OF FIGURES

Table No. TITLE Page No.

6.1 Age of Respondents

6.2 Size of the family

6.3 Source of income

6.4 No.of current loans from money lenders

6.5 Size & types of loans from money lenders

6.6 Other loans

6.7 Reasons why respondents borrowed from money lenders as against other forms of credit

6.8 Reasons for taking out loans from money lenders

6.9 Factors precipitating borrowing from money lenders

6.10 Reasons why respondents access to banks & other Credit institutions

6.11 Consequences of missing a repayment of loan

6.12 Feelings about loans money lenders

CHAPTER I

INTRODUCTION

Introduction

In India, the income standard of people is almost uncertain and leads to

more consumption rather than saving which has now been a central problem. As

a developing state in India, Kerala has succeeded in growth and equity.

According to the ‘Situation Assessment Survey – 2013’ by National Sample

Survey Organisation, the share of institutional agencies in loans owing of farm

households in India was only 87.7 percent which was 9.4 percentage points lower

than the share in 2002-03. On the other hand, informal agencies provided 42.4

percent of owing loans of farm households in 2013 as against 40.6 percent in

2002-03. The share of moneylenders in total payments of rural households has

enlarged from 17.5 percent in 2002 to 25.7 percent in 2013. Furthermore, a Rural

Finance Access Survey 2003, conducted by the World Bank and National

Council of Applied Economic Research, revealed that 79 percent of the rural

households had no access to credit from formal sources.1 The above facts point to

the re-emergence of rising role of informal agencies in the provision of credit. It

is, in this context, that the Reserve Bank of India has taken measures for financial

inclusion and constituted a technical group for review of legislations on money

lending.2

The above trend is noticeable in case of Kerala also. The share of formal

resources in total debt owing of farmer households declined to 82.3 percent in

2013 from 92 percent in 2002-03. Despite strong presence of formal financial

institutions like commercial banks and cooperatives, in Kerala, money lenders

1

(informally known as ‘blade companies’) form an important segment of the

financial sector of the state as they are engaged in deposit taking and money

lending activities in a significant way. The operations of money lenders are not

new to Kerala as they have been in existence for centuries in various forms. In

recent years, however, developments like

i. Ban on accepting public deposits by UIBs

ii. UIBs link with NBFCs and other entities

iii. Rising indebtedness and suicides

iv. Complaints from the public

v. Emphasis on financial inclusion

warrants thorough examination of working of these entities.

Significance of the project

Kerala has succeeded a prominent position in the financial map of Indian

Financial System. But, Kerala’s typical debt, comprising internal debt,

small savings and provident fund and loans and advances have accelerated

vigorously from the closing 15 years. This situation spreads a few of

the humans additionally. One of the major sources of debt in Kerala

is private cash lenders. The money lending market in Kerala become empowered

with a robust law i.e. Kerala Money Lender’s Act, 1958. But this market place is

getting bigger and the law seems turned into by no means used until now. This

act prescribed a chain of measures including giving the state the right to fix the

extent of interest charged by way of the lender,

strict rules and felony implications to prevent harassing of borrowers, and

2

fines, penalties and imprisonment for violating the provisions of the Act.. This

Act was revoked time and again, but this time on a grand scale to stop money

lending activities in Kerala. It came with a new nomenclature – ‘Operation

Kubera’. General public are supporting the state to prosecute illegal money

lenders. But rising money lending market in Kerala increases the suicides by

borrowers. Unsighted borrowing habits of people are the basic reason of this

social problem.

The project focuses in the present social problem i.e. borrowers’ suicides

based on informal financial institutions like private money lenders and the

government intervention on that. In this context the project aims to explore the

borrowing habits of people and reasons of their suicides, hurdles in the private

money lending market, impact of government intervention which provide a

healthy socio – economic environment in Kerala. This project will contribute

favourable changes in the socio-economic condition of Kerala.

Research problem

The project area is under a serious consideration of Government of Kerala

and public these days. But, problems created by informal financial institutions in

the provision of credit have been a policy challenge in Kerala. E.g. private

money lenders. Though they meet the credit requirements of a section of the

society, their unrestrained growth, unlawful activities and links with other

institutions may pose threats to the stability of financial system and makes policy

less effective. Furthermore, they create social problems when they charge

unreasonable rates of interest and resort to unethical practices for recovery of

loans, which in turn, leads to suicides by borrowers. In this context, many

questions to be answered. Is there any relationship between borrowing habits of

3

people in Kerala and development in the money lending market? What are the

reasons of low recovery of loans and borrowers’ suicides? What are the legal

measures taken up by the Government of Kerala to reduce this social problem?

What is the influence of ‘Operation Kubera’ – present drive against private

money lenders in Kerala? The project attempts to find out answers to these

questions through analysing private money lending market and borrowers’

suicides in Kerala. In this context the proposed minor research project aims to

provide some measures to overcome the problems in the present condition.

Objectives of the project

1) To explore the working of private money lenders in Kerala.

2) To analyse borrowing habits of Kerala.

3) To identify the reasons of borrowers’ suicides.

4) To describe the legal framework and present Government intervention.

5) To identify the drawbacks of present financial system with regard to

borrowings.

Scope of the project

This project is confined to the State of Kerala. The affected people of

money lending are the respondents. The period of the project is two years from

2015 to 2017.

Hypotheses of the project

4

1) H0 : All the age groups have equal stress on the average or µ1=µ2=µ-

3=µ4=µ5, where µ1,µ2,µ3,µ4,µ5 are mean stress scores for the three age

groups.

H1: The mean stress of at least one age group is significantly different.

2) H0 : Family income and size of the loan are associated.

H1: Family income and size of the loan are not associated.

Methodology

The project is conducted all over Kerala. The project is based on

descriptive research approach using primary and secondary data.

Sources of Primary data

Structured questionnaire is used to collect information from respondents.

Borrowers from money lenders are the population.

Sources of secondary data

Various books, journals, Kerala Gazzette, websites etc.

Sampling design

Multi stage sampling is administered to select samples from the

population. In the first stage, Kerala is divided into three regions, i.e. south, north

and central. From among these regions, seriously affected districts are selected.

They are Alappuzha, Thrissur and Wayanad respectively.

Sampling size

5

A list of borrowers is prepared in each district. Among them 150

respondents are selected by using lottery method. Total sample size is 450.

Tools of Analysis

Mathematical and statistical techniques like percentages, correlation

analysis, factor analysis and One-Way ANOVA is administered for analysing

the primary data.

Limitations of the project

Many of the respondents are afraid to give right information about money

lenders.

It is very difficult to cover the entire samples within the limited period.

Incomplete information from the official records.

Chapterisation of the Project

Chapter One – Introduction

This chapter contains the introduction of the project, research problem,

objectives, significance and scope, hypotheses, methodology and limitation of

the project.

Chapter Two – Review of Literature

This chapter describes various studies done on the related topic. This

chapter helps to identify the research gap in the topic.

Chapter Three – Indian Financial system : An overview

6

This chapter explains the working of the present financial system in India

and its components. The financial institutions- organised and unorganised sector

explained in detail, which includes the money lenders.

Chapter Four – Private money lending market in Kerala.

This chapter gives a detailed picture of the operation of private money

lending market in Kerala. The operations of private money lenders and social

problems created by them are discussed in detail.

Chapter Five – Legal framework and Government intervention

This chapter describes legal control and supervision, Government

intervention, explanation of Kerala Prohibition of charging exorbitant interest

Act, 2012, Operation Kubera etc.

Chapter Six - Data analysis and Interpretation

This chapter contains primary data analysis. The results of correlation

analysis, factor analysis and One-Way ANOVA explained here.

Chapter Seven – Findings, Suggestions and Conclusion

The last chapter of this project explains the major findings of the project

and suggestions on the basis of the study. Finally the project is concluded with

the information acquired through the project.

7

CHAPTER 2

REVIEW OF LITERATURE

Christina Oraso (2017)1 in her paper describes, through a theoretical

approach, the interactions between institutional lenders and local moneylenders,

and how these affect the rural credit market. It evaluates the effects produces by

the introduction of “spillovers” in a rural credit market with rationing in which

banks and moneylenders interact simultaneously while working in distinct

segments. Due to the strong and consolidated social ties, it is probable that the

spread of knowledge concerning potential debtors comes about in targeted and

rapid way with reduced costs for the lenders as well.

Puja Mehra, (2015)2 explains that in evidence of diversion of cheap farm

credit, it is found that a substantial proportion of the credit disbursements year

after year are made during the months of January to March. Though data shows

that institutional credit is close to 100 percent of the total short term farm input

costs, the other striking point of this paper is the sharp rise in the lending by

private money lenders. Credit from non-institutional sources is rising despite the

rates of interest from the institutional ones being much lower. According to the

latest All India Debt and Investment Survey (AIDIS) of the NSSO, in 2013, only

a tenth of the institutional sources’ outstanding debt was at interest rates above

15 percent. For non-institutional sources this was 71 percent. Only one percent of

the institutional sources’ debt was outstanding at rates above 30 percent. But for

non-institutional sources this was more than 34 percent. The non-institutional

agencies seem to be flourishing even though they charge exorbitant interest rates.

8

RamaRani.M.A., (2014)3 suggested that marginal and small farmers

require special attention with regard to credit supply from financial institutions

with a view to check the exploitation by non-institutional agencies. There should

be structural changes in the organisation of co-operatives, so that these can be

freed from too much bureaucratic control. It is also necessary to set up a

regulatory body to oversee the business of commission agents and to formulate

the rules and regulations in this regard. In case of non-institutional sources about

one-third of the respondents faced the problems regarding high rate of interest

charged by the moneylenders while about one-fifth of the respondents had to sell

their output at lower prices and faced the problem related to the security in the

form of land or gold etc. Large farmers faces less problems while availing credit

from money lenders were surer of repayment of loans from large farmers as

compared to the other categories.

State Planning Board, (2006)4 studied that though Kerala has a wide

network of formal financial institutions and bank penetration rate is one of the

highest in the country, still, thousands of people approach money lenders for

keeping deposits and taking loans. In case of deposits, the customers are mainly

from the mid-income segment, who are very conscious about the interest rates

that they want to get. A major section of the customers keep their deposits for the

purpose of marriage of their daughters or for some other social functions. They

are not much concerned about the risk involved in the deposits as many of the

financiers are personally known to them for years. The earlier referred survey

found that even unregistered money lenders are accepting deposits.

State Planning Board, (2005)5 studied that they

have been many reviews approximately the failure of money creditors and

the proprietors absconding from the place of work. There also are instances of

9

financiers intentionally cheating the depositors. In a few instances,

the identical financier will re-emerge in brand

new vicinity by offering very appealing deposit schemes. Once they acquire a

great quantity of deposits from that vicinity, they truly vanish from the place of

job. There's no data on a number of firms closed down and amount lost by the

depositors. In case of closure of a firm, the offices of Inspecting Assistant

Commissioner come into the scene only when it receives complaints from the

public. By the time it acts on the complaint and starts some enquiry, the

financiers would have taken enough precautions to make sure that they are

caught free. Generally, the failure rate is high in case of firms run by individuals

and when they are providing loans for highly risky business operations relating to

real estate, share market etc. As per a survey conducted by the ‘All Kerala Blade

Companies Abolition Front’, about Rs.190 crores were cheated by private

financiers in seven districts of the state during 1995-99.

Lodha (2002)6 in his project titled “Social Lending – Its Relevance in

Deregulated Economy” studied “how far the two extremities, viz. profit

maximization and social lending will co-exist in the deregulated market,

particularly in a developing economy like India. He concluded that- (1) Social

lending should continue despite reforms; (2) Economic reforms should continue;

(3) Target lending should be abolished; (4) Social lending should be confined to

weaker sections only; (5) Time bound lending with least formalities should be

ensured; (6) Lending decision should be based on cost benefit analysis; (7)

Subsidy in social lending should be scrapped; (8) Loss making rural branches

should be converted into satellite offices; (9) Self- help groups should be

encouraged; and (10) Business hours and days should be changed to face

competition”.

10

Das (2001)7 in his project titled, “A Project on the Repayment Behaviour

of Sample Borrowers of Arunachal Pradesh State Co-operative Apex Bank

Limited”, examined the “repayment behaviour of loanees, covering a period of

1994-95 to 1998-99. On the basis of primary data collected, researchers

concluded that incidence of default was highest among borrowers for agriculture

and allied activities loans. Agriculture loanees, horticulture loanees, small

business loanees and service sector loanees were ranked 2nd, 3rd, 4th and 5th in

a descending order on the basis of percentage defaulters. The project further

revealed that the number of defaulter loanees was highest in government

sponsored schemes”.

Niranjanraj and Chitanbaram (2000)8 in their project titled, “Measuring

the Performance of DCCBs” observed that “suitable models should be developed

to evaluate the performance of co-operative banks. They considered 23

parameters falling into four major groups for measuring the performance of

District Central Cooperative Banks and assigned appropriate weights to each

parameter. They ranked 14 District Central Co-operative Banks of Kerala based

on composite marks”. They suggested that performance of co-operative banks

should not be measured in terms of financial/ economic achievements only but

their performance as cooperative organizations’ social achievements should also

be evaluated.

Deolalkar (1998)9 in his project titled, “The Indian Banking Sector on

Road to Progress” observed that NPAs in Public Sector Banks were recorded at

about `457 billion in 1998. About 70% of gross NPAs were locked up in “Hard

Core” doubtful and loss assets, accumulated over the years. He further added that

the main cause of NPAs in the banking sector was the ‘Directed Loans System’,

under which the commercial banks were required to supply a prescribed

11

percentage of their credit (40%) to the Priority Sector. Such loans supplied to the

micro sector were problematic of recoveries, especially when some of the units

become sick or weak. These 74 loans had led the borrowers to expect that like a

non-refundable state subsidy, bank loans need not be repaid.

Schrader, (1994)10 described that in general, there are many prejudices

about money lenders and they are sometimes considered as an anti-social

institution. The main prejudices are:-

1) Informal lenders exploit their clientele;

2) Informal credit is used in an unproductive way;

3) Informal finance is not regulated and it may undermine monetary policy.

Bouman and Hospes, (1994)11 studied that “there is an increasing

recognition of the role and strength of informal finance in meeting the credit

requirements of small borrowers. The overwhelming view is that informal sector

responds remarkably well to the short-term credit requirements of lower income

people and it allows them to access services not available from the formal

institutions. Informal sector works in an environment which is suited to the low

income people”. “Both financier and borrower know each other by face and

cultural affinity creates the feeling of confidence in each other. The services

provided by informal lenders are considered as valuable by their clientele as

many times these services would not be available from elsewhere. However,

from an economic perspective, the services of informal lenders may not be

efficient as they usually charge prohibitive rate of interest. Hence, they cannot

make efficient reallocation of resources throughout the economy and contribute

to economic growth as in the case of formal finance”.

12

Jugale (1992)12 in his book ‘Co- Operative Credit in Indian Agriculture’

discussed the socio-economic impact of co-operative credit on agriculture sector.

In his project, he found that the “real success of cooperative credit depends on

achievements of the Primary agriculture society (PACS) and Land Development

banks (LDBs) at micro level. The PACS are entitled to disburse the short term

and medium term loans while long term loans are being disbursed by LDBs. But

most of the benefits of these credit facilities are being harnessed by rich class of

agriculture sector”. Not only this, but they have also have a major role to play in

the governance of PACS. The project further concluded that these credit facilities

are mainly responsible for transforming the cropping and land use patterns.

Khan (1986)13 in his paper titled, ‘Strategy for Farm Planning and

Agricultural Credit for Rural development’ analysed the “credit needs for agro-

based industries to generate rural employment which are particularly important

for small farmers and women. It was further suggested that the crops and

livestock insurance policies should be introduced in order to reduce the risk of

borrowers and lenders”.

Kalyankar (1983)14 in his project titled, “Willful Default in Loans of

Cooperatives”, examined the “trends in deposits, share capital, working capital,

loans outstanding, advances, over dues and recoveries at the district level

financing institutes. Socio-economic factors responsible in projecting and

promoting future development in the operations and approaches of the co-

operative credit organizations were also considered to examine the specific

progress made by Central Co-operative Bank of Parbhani District”. “The project

revealed that the cropping intensity, irrigation facility and working capital of the

societies were the major factors for explaining over dues at primary agricultural

credit societies’ level. The socio-economic factors were not responsible for

13

increasing over dues at the borrowers’ level, but over dues were mainly mounted

due to the non-economic factors in case of willful defaulters”.

Devi (1982)15 in her unpublished PhD Thesis ‘Bank Financing of

Agriculture in Andhra Pradesh’ found that Andhra Bank emerged as the “biggest

of the private sector banks after the nationalization of the 14 major banks in 1969

which has fast moved towards rural banking as demonstrated by its performance

in the rural branch expansion. She found that the bank was doing well in terms of

disbursing credit to the agriculture and allied activities under various schemes”.

Markand (1979)16 in his book titled, “Social Priority Index of Public

Sector Banks” evaluated “the performance of public sector banks. With the help

of performance index consisting six quantitative indicators, such as branch

expansion, priority sector credit and wage cost, he concluded that the priority

sector financing was essential”. For better performance in this sector, he

suggested that lending power should be delegated to the branch managers.

Kulkarni (1979)17 in his project titled, “Development Responsibility and

Profitability of Banks” stressed upon social accountabilities of the banking

sector. He was of the view that looking for profit enlargement only was not true

profitability of banks as social aids arising out of bank operations cannot be

ignored. He observed that while satisfying the social responsibility, banks should

try to make the basic banking business as successful as possible, reduce cost,

develop banking system and increase the overall profitability.

Suryabansi (1978)18 in his paper ‘Credit Requirements Availability and its

Gaps’ observed that big farmers received a larger share of loan advanced by

different financial agencies and the share of co-operatives was the maximum. It

was also observed that private money lenders were, still playing an important

14

role in supplying rural credit and the proportion of borrowings from this source

was higher in case of small farmers.

References

1) Cristina Orasa, 2017, Formal and informal sectors: Interactions between

moneylenders and traditional banks in the rural Indian credit market,

Research Gate.

2) Puja mehra, 2015, Think tank report hints at diversion of cheap farm loans,

The Hindu daily June 23.

3) RAMA RANI M.A., 2014, Perception of Farmers Regarding Non

Institutional Sources of Finance: A project of Patiala District (Punjab),

International Journal Of Core Engineering & Management (IJCEM),

Volume 1, Issue 9, December, pp 75.

4) State Planning Board, 2006, Draft Approach paper for Kerala’s Eleventh

Five-Year Plan, Thiruvananthapuram.

5) State Planning Board, 2006, Project report of the working group on Non

banking Financial Institutions in Kerala, Thiruvananthapuram.

6) Lodha, 2002. Social Lending – It’s Relevance in Deregulated Economy.

IBA Bulletin, (April), Mumbai. 34.

7) Das, Debabrata, 2001. A Project on the Repayment Behaviour of Sample

Borrowers of Arunachal Pradesh State Co-operative Apex Bank Limited.

Indian Cooperative Review, Vol. XXX No.2 (Oct.)

8) Niranjanraj and Chitanbaram, 2000, Measuring the Performance of

DCCBs. NAFSCOB Bulletin (Oct.-Dec.), Mumbai.

15

9) Deolalkar, 1998. The Indian Banking Sector on Road to Progress. [online]

available at: www.abd.org, www.scribd.com [accessed on 07.03.09].

10) Schrader.H., Formal and Informal Finance in Contemporary India,

Working Paper, No.215, Bielefeld, Germany, 1994

11) Bouman,F.J.A. and O.H.O.Hospes, Financial Landscapes Reconstructed:

The Fine Art of Mapping Development, Mansholt Graduate School of

Social Sciences, The Netherlands, 1994.

12) Jugale, V. B., 1992. Co- Operative Credit in Indian Agriculture. New

Delhi: Mittal Publications.

13) Khan, R.A.R., 1986. Strategy for farm planning and agricultural credit

for rural development. Agric. Digest, pp 6(10186):

14) Kalyankar, 1983. Wilful Default in Loans of Co-operatives. Indian

Cooperative Review, Volume XX No.2, New Delhi.

15) Devi, 1982, Unpublished PhD Thesis.

16) Markand, 1979. Social Priority Index of Public Sector Banks. Calcutta:

Allahabad Bank Publications. 88 35.

17) Kulkarni, L.G., 1979. Development Responsibility and Profitability of

Banks. Economic and Political Weekly (Aug.), Mumbai.

18) Suryabansi, S.D., 1978. Credit Requirements, Availability and its Gap,

Indian Journal of Agricultural Economics, Vol. XXXIII. No.4. 58.

16

CHAPTER 3

INDIAN FINANCIAL SYSTEM : ANOVERVIEW

Introduction

The Indian Financial system consists of two segments: an organised sector

and a traditional sector. The organised sector, which is organised on modern

lines, includes commercial, development and co-operative banks, the stock

market and various non-banking financial institutions like insurance companies

and mutual funds. “The traditional sector also known as the informal credit

market is the set of indigenous financial institutions such as rural and urban

moneylenders who mainly finance small enterprises, farms and household

consumption”. The different institutions within the organised sector can be

broadly grouped into banking and other financial institutions with the Reserve

Bank of India as central bank. The banking system consists of commercial and

co-operative banks.1 Commercial banks include Indian banks in the public and

private sectors in addition to foreign banks operating in India. Other financial

institutions include the special machinery of term lending institutions, normally

termed as development banks. “The RBI being the central bank has its link with

non-financial sectors through banks and other financial institutions, which

implement the policies initiated by the Reserve bank”.

17

Indian Financial System – an overview

Components of Indian Financial System

Financial institutions Financial Markets Financial Instruments Financial

Services

In these components, the financial institutions are discussed in detail:-

Financial institutions

Banking institutions Non-Banking Institutions

Organised sector Unorganised sector

Commercial Banks Indigenous Banks

Co-operative Banks e

RRBs

Foreign Banks

18

Money Lenders

Financial institutions can be classified into two categories:

A. Banking institutions

B. Non-Banking financial institutions

Banking institutions

Indian banking industry is subject to the control of the Central Bank

(Reserve Bank of India). “The RBI as the apex institution organises, run,

supervises, regulates and develops the monetary system and the financial system

of the country. The main legislation governing commercial banks in India is

Banking Regulation Act, 1949”. The Indian banking institutions can be broadly

classified into two categories:

1) Organised Sector

2) Unorganised Sector

Organised Sector

The organised banking sector consists of commercial banks, cooperative

banks and the regional rural banks.2

a) Commercial Banks: The commercial banks may be scheduled banks or non-

scheduled banks. “Traditionally, commercial banks accepted deposits and met

the short and medium term funding needs of the industry. But now, 1990’s,

banks are also funding the long term needs of the industry particularly the

infrastructure sector. The liberalisation measures initiated in the Indian

economy, led to the entry of large private sector banks in 1993. This has

increased competition among public and private sector banks and quality of

services has improved”. A major development in the Indian banking industry

was the entry of major banks in merchant banking. “The merchant bankers

19

are financial intermediaries providing a range of financial services to the

corporate and investors. Some of the merchant banker’s activities include

issue management and underwriting, project counselling and finance, mergers

and acquisition advice, portfolio management services etc”.

b) Co-operative banks: “An important segment of the organised sector of Indian

banking is the co-operative banking. The segment is represented by a group

of societies registered under the Acts of the States relating to co-operative

societies. In fact, co-operative societies may be credit societies or non-credit

societies. Different types of co-operative credit societies are operating in the

Indian economy”. These institutions can be classified into two broad

categories:

i. Rural credit societies which are primarily agricultural;

ii. Urban credit societies which are primarily non-agricultural.

“For the purpose of agricultural credit there are different co-operative

credit institutions to meet different kinds of needs. For example, short and

medium term credit is provided through three tiers federal structure”. At top is

apex body i.e. State Co-operative Bank; in the middle there are District Co-

operative Banks or Central Co-operative Banks, at the grass root level i.e.,

village level there are Primary Agricultural Credit Societies. “For medium to

long term loans to agriculture, specialised co-operative societies have been

formed. These are called ‘Land Developement banks’. These banks deal with

agriculturists directly”.

c) Regional Rural Banks (RRBs): These were set by the state government and

the sponsoring commercial banks with the objective of developing the rural

economy.3 “Regional rural banks provide banking services and credit to small

20

farmers, small entrepreneurs in the rural areas. These were set up with a view

to provide credit facilities to weaker sections”.

d) Foreign banks: Foreign banks have been in India from British days. These

banks are concentrated on corporate clients and have been specialising in

areas relating to international banking. “A foreign bank is with head office

outside India, the branches are located here. It is an officially chartered

institution empowered to receive deposits, make loans, and provide checking

and savings account services, all at a profit”.

Unorganised Sector

In the unorganised sector are the indigenous bankers, money lenders,

seths, sahukars carrying out the function of banking.

a) Indigenous bankers: “These are the forefathers of modern commercial banks.

These are the individuals or partnership firms performing the banking

functions. They also act as financial intermediaries. As the term indigenous

indicated, they are the local bankers. The geographical area covered by them

is much larger than the area covered by commercial banks. They can be found

all parts of the country although their names, styles of functioning and the

functions performed by them may differ”. The history of indigenous banking

in India dates back to ancient times. “The dominance of indigenous bankers

can be seen from the fact that they not only provided credit to trade and

commerce but at times to the government of the day also. However, with the

arrival of the British, the European bankers with the patronage of the rulers

started dominating. With the advent of joint stock commercial banking and

co-operative banking, the area of operation of indigenous bankers shrank

21

further”. Still there are thousands of families consisting mainly of particular

communities who are in the business of indigenous banking.

According to the Indian Central Banking Enquiry Committee (1931), “an

indigenous banker is any individual or private firm receiving deposits and

dealing in hundies or lending money. Although deposit side is emphasised, these

banks do not necessarily depend upon this source entirely, like modern

commercial banks.4 Many among them also use large funds of their own”. There

is no certainty about the exact number of indigenous bankers operating all over

India. “Indigenous bankers provide finance for productive purposes directly to

trade and industries, and indirectly, through money-lenders and traders and

traders to agriculturists with whom they find it difficult to establish direct

relations. They keep in touch with traders and small industrialists and finance

marketing on a sizable scale”. “Lending is conducted on the basis of promissory

notes, or receipts signed by borrowers acknowledging loans, and stating the

agreed rate of interest, or bonds written out on stamped legal forms, or through

signing of bankers’ books by borrowers. For large loans land, houses or other

property are held as mortgage”.

b) Money lenders: Money lenders depend entirely on their own funds for the

working capital. “Money lenders may be rural or urban, professional or non-

professional. They include large farmers, merchants, traders, arhatias,

goldsmiths, village shopkeepers, sardars of labourers etc. The methods and

areas of operation differ from money lender”. The main characteristics of

money lenders are the following:

1. Their funds are own funds;

2. Their clients are mainly the weaker sections of society;

22

3. Their loans are highly exploitative. They charge very high rate of

interest;

4. Their operations are entirely unregulated; and

5. The credit is prompt and flexible.

“Money lenders are able to exploit the weaker sections because of their

dependence on them. They enjoy monopoly in their areas of operation”.

Conclusion

It may be clarified here that although in common parlance indigenous

bankers and money lenders are considered to be the same, the two should not be

confused. Money lenders are not the bankers, their business is money lending

only, i.e. a pure money lender lends only from own funds, and where as

indigenous banker raises funds from the public also. Taken together money

lenders and indigenous bankers function to lend money to various categories of

borrowers and under varying conditions. Money lenders, though also found in

urban areas, predominate in villages and they conduct agriculture, trade and retail

business. Loans are extended to villagers of small means, etc. Loans, if small, are

given on the basis of a mere entry in their account books or even on verbal

promise, but if large, promissory notes or mortgage of crops or land, or

ornaments, etc., are insisted upon. Interest rates are generally very high. Since

many loans are for unproductive purposes, these pile up into big indebtedness,

involving heavy burden from generation to generation. Despite attempts at

regulating them, restricting their operations and lately of liquidating them, they

continue to keep their hold on agriculturists and small borrowers. However, their

importance is sure to decline as and when such modern institutions as co-

23

operative societies, commercial banks, regional rural banks, etc., are able to

make their facilities available easily and in a simple and flexible manner.

24

CHAPTER 4

PRIVATE MONEY LENDING MARKET INKERALA

Introduction

The growth of government financial institutions in Kerala both in terms of

number of branches and quantum of credit has been impressive especially in the

post-bank nationalisation period.5 However the mushrooming growth of non-

banking finance companies which include chit funds, loan companies and other

finance companies suggest that institutional credit sources are inadequate to meet

the variety of demands for credit.

Kerala had a unique system of mobilising the people’s savings even prior

to independence. The financing business was undertaken as a family venture in

many parts of the state especially in Thrissur and Travancore areas. The merger

of smaller banks with bigger banks gave birth to private financing firms. These

tiny units were working as family concerns mobilising resources from friends

and relatives and paying a very high interest when compared to that given by the

banking system.6 The private financing firms also made available loans to the

needy at liberal terms with less cumbersome procedures and in a speedier manner

than in banks, of course at a higher interest rate. The companies’ offering higher

earnings influenced the individual savers using their family ties to place their

surplus funds with the private financing firms. In many cases, the large

depositors received some valuable gifts also, which is not available from the

banking system. Thus the private financing firms were running a parallel banking

system and posed a threat to the Indian banking system. These companies

operating from posh offices with attractive advertising were providing allied

25

services like full payment for premature closure of fixed deposits; day and night

services etc. which could attract almost all classes of the society to their folds.

The resources so mobilised were lent to large business houses and also for

acquisition of vehicles and landed properties. Similarly personal loans were

given against gold and silver ornaments at a comparatively higher rate per gram.7

Personal confidence was the basis on which loans were issued after

examining a borrowers’ history, his business standing and his credit worthiness.

Usually loans were given only to local businessmen. Strangers or outsiders found

it very difficult to obtain loans from the firms. The guarantee or recommendation

of a partner was considered as a criterion for the issue of the loan. This reduced

the risk element in the repayment of the loan.8 A loan is usually issued on the

strength of promissory note with two sureties known to the firm. Bigger firms

issuing big amounts obtain property security, equitable mortgage deed and other

collateral securities. A few firms even collect post dated cheques at the time of

issuing the loan to ensure timely repayment of the loans. Usually there is no

problem with regard to repayment of loans. If they are unable to repay the loan in

time, they may renew the loan. The personal obligation of the businessmen to the

partner who recommended his loan also compels him to repay the loan in time.

The steady demand for loans from the business community was due to

many reasons. Easy availability, immediate release of the loan, personal sureties,

simple procedures and instalment repayment facilities are some of the advantages

of these loans compared to loans of commercial banks. Businessmen in many

situations require a bulk amount of money for short periods in order to purchase

goods in large quantities, take delivery of goods sent through rail or roads or for

paying certain dues.9 The financing firms are the most suitable and easily

26

accessible type of financial institutions which can meet their short term credit

requirements instantly.

A serious defect of the parallel banking system is that it advances loans

only to business and other speculative type of activities which yield immediate

windfall profits and can pay the high interest rates.10 Thus the available savings

in the community is diverted only for trading and other such speculative type of

activities.

Absence of adequate promoter’s stake in the business, credit expansion

disproportionate to deposit accretion and diversion of funds for speculative

purpose, exorbitant operation cost on account of higher interest and incentives

etc led to the crash of a majority of these companies. Coupled with these, the

raids conducted by the RBI and the state government officials as also the

restrictive provisions in the Kerala Money Lenders Amendment Ordinance had

made the survival of these companies very difficult.

Role of Private Money Lenders in the Financial Sector

The relative position of money lenders among the various financial

institutions in the State are measured here in terms of major indicators like

number of branches, deposits and advances. Number of money lenders is quite

high as matched to the branches of formal financial institutions in Kerala.11 It

indicates wider approachability to the customers and the consequent high

penetration rate. In case of deposits, their relative share is small, however when

matched with the deposits of NBFCs it is very high. On the credit side, money

lenders have a larger share in total credit owing of all institutions.

27

Number and Features of money Lenders

There is no authorised data available on the number of money lenders in

Kerala. Through the offices of inspecting Assistant Commissioner, located in

various parts of the State, have the information on the money-lenders registered

with them, they are not regularly compiled at the State level to get a total

picture.12 State Planning Board reported the number of registered money lenders

under the Kerala Money Lenders Act, 1958 in the State at 5696 in 2005. Besides

the registered firms, there are several unregistered firms, centred on individuals,

who are engaged in deposit taking and lending business similar to the business

done by money lenders. These unregistered units are mainly doing business from

their own houses or from their business institutions. There is no estimate of the

number of money lenders in the unorganised sector. Some of the experts feel that

the number of unregistered firms will be at least as equal to the total number of

registered money lenders in the state.13 Even people in the higher levels of the

society like doctors, lawyers, bank employees, college teachers and politicians

are informed to be involved in this business as it is actual lucrative.

Money lenders in Kerala contain of both big and small firms. In terms of

number of money lenders, mainstream of them are small firms run by

individuals. On the other extreme, there are rare business families having large

number of money-lending firms across the state.

However money lending firms are registered, under the KMLA, 1958,

their nature of business is informal in the absence of well-intended rules and

procedures for the conduct of the business.14 “It is left to financier to decide the

modalities for accepting deposits and providing loans. The business is done in a

very simple way with least paper work. From the accounting side also they are

28

working like informal institutions as they are not recording all the transactions in

the books of accounts. One significant feature of the loans provided by the

financier is its high frequency”. The frequency of the loan is high because of two

factors, viz.,

i) Very short duration of the loan

ii) Daily collection of loan amount.

Some of the loans are given for a short period of 100 days or not exceeding 6

months.15 Generally, the settlement period of loan will not exceed 12 months. In

many cases, there is a practice of daily collection of loan amount. In case of 100

days loan, the loan amount and interest is repaid daily in 100 equal instalments.

Daily collection is more customary among the traders and business people. It

improves the liquidity position of the financiers and in turn more number of

loans provided. Hence, the data on outstanding amount of loans, at the end of

year, of a financier will not replicate the actual volume of business undertaken by

the firm during that year.

In general, around two-third of the loans are given against security of

gold. “It is considered as a more secured business as they generally provide only

around 80 percent of the value of gold as loan. However, in case of gold loan

also there is a risk. Some firms, who are very eager to expand loans, provide

even more than 80 percent (now and then more than 100 percent) of the value of

gold as loan. In such cases, if the loan amount is not repaid within stipulated

time, the financier will lose money. There is also a practice of giving loans

against promissory note, cheque, etc. Some financiers provide loans only on the

basis of personal security”.

29

People approach money lender for urgent cash requirements, they are not

much bothered about the interest rates.16 “Some of the customers do not even ask

what the interest rate on the loan is. For official purpose, money lenders record

only legally allowed interest rate (now fixed at 12 percent) in their books of

accounts. In reality, there will not be a single case in which a money lender is

accepting only normal interest for their advances. The actual interest rate on

loans varies from 24 percent to 60 percent depending upon the customer, nature

of the loans, repayment period, security provided, etc. A survey conducted by the

Government of Kerala, revealed that 42.5 percent of the money lenders charge

interest rates between 18-20 percent”. In case of unregistered firms, the interest

rate can go up to 120 to 180 percent. The above referred survey found that

majority of the money lenders charge interest rates in the range of 30-70

percent.17

In particular areas of the State, individual financiers from “the

neighbouring state, eg. Tamil Nadu, provide loans to people belonging to lower

strata of the society, consisting of labourers, petty traders and unemployed, at an

interest rate of Rs.10 per Rs.100 for a month. It is 120 percent in a year. The loan

is given without any security”. These individual financiers go around the villages

and market places to get their customers. Some unregistered financing can be

found in market places, where individual financiers provide loan to small

traders.18 “They provide block loans, in which they first block the interest by

deducting it up-front from the loan amount. For example, from a loan of Rs.100,

the borrower will be given only Rs.90 i.e. interest Rs.10 is deducted at source. At

the end of the day, the borrower has to pay back Rs. 100 to the lender. In this

case, the interest rate on a yearly basis comes to a whopping 4055.6 percent”.

30

Money Lenders Social problems like suicides, fled from homes etc.

Money lenders do meet the credit necessities of a section of the society,

but easy availability of money often persuade the people to borrow even for

disorganised expenditure. As it is a costly borrowing and many of the borrowers

do not have regular income to pay back, often the repayment responsibility

multiplies beyond their capacity which leads to suicides, fleeting from homes or

ends up in clashes and physical fights. One of the many reasons for the suicides

committed by the farmers in districts like Wayanad was said to be due to

harassment by money lenders. “It is in this context that the Government of India

had announces a scheme in 2004 to free farmers from the clutches of money

lenders by providing loans by banks to farmers who are indebted to money

lenders”.

There have been some tries by social organisations to deal with the

problems created by the money lenders. ‘Blade Nirmarjana Samithi’

(Organisation for eradication of blade companies), a social welfare agency in

Kerala, had conducted a State-wide survey on the ill-effects of operations of

money lenders in 1995-96. “The survey revealed that 176 people committed

suicide, 4,856 families fled from their homes and 86 persons, including 34

women, were arrested as they failed to repay the loans. It is estimated that in

Kerala around 50 lakh people are affected either mentally or physically by the

evils of the money lenders. Realising the wider social problems created by these

financiers, the BNS has filed a petition in the High Court of Kerala to curb the

activities of these financiers”. Social scientists, therefore, take on that there could

be a correlation between the number of suicides and the growth of money

lenders.19

31

“The reasons for rising activities of money lenders can be found in:

a) Excessive consumerism of the people i.e. people borrow heavily for

purchasing consumer durables and vehicles;

b) Borrowing for payment of dowry, construction of house and medical

treatment;

c) Neglect of credit requirements of lower middle class by the nationalised

banks”.

Conclusion

There is distressing rise in indebtedness of people in the State, especially

among the farmers in rural areas. The number of people, who committed

suicides, due to incapability to repayment the loans taken from money lenders at

high rate of interests, is also rising in the State. The establishments have been

receiving several complaints from the public about the actions of money lenders.

There are many instances of non payment of depositor’s money and using

unscrupulous means to recover the loans.

32

CHAPTER 5

LEGAL FRAMEWORK AND GOVERNMENT

INTERVENTION

Introduction

This chapter describes the significant legal provisions enclosed in the RBI

Act 1934 and its amendments, Financial Companies Regulation Bill 2000 and

Kerala Money Lenders Act 1958. So that it is clear to identify the provisions

which need to be reinforced for orderly working of money lenders.

Reserve bank of India Act, 1934

a) Introduction of Chapter IIIC in 1984

Till 1984, “the RBI Act 1934 was silent on the deposit taking activities of

Unincorporated Bodies (UIBs) like money lenders. However, Chapter IIIC on

“Prohibition of Acceptance of Deposits by Unincorporated Bodies” was

introduced in the RBI act 1934 (with effect from February 15, 1984). Under

Section 45S in Chapter IIIC, no individual, firm or unincorporated association of

individuals could accept deposits from more than 25 depositors per partner and

not exceeding 250 depositors in all, excluding deposits from relatives”. In cases

where individual, or firm or unincorporated association of individuals are having

deposits from more number of people than as specified above, they are to be

repaid within two years from the commencement of Section 10 of the banking

Laws (Amendment) Act, 1983 so as to bring down the number of depositors

within the limits specified. However, “this provision was not very easy for

33

money lenders to suitably adjust the number of depositors without affecting the

total amount of deposits held by them. Ideally, instead of fixing the number of

depositors, the total amount of depositors, the total amount of deposits should

have been specified for better control and supervision”. Another problem was

that the RBI did not set up or designate any official machinery to see that the

provisions are not violated.

ii) Amendments of Section 45S in 1997

As the provisions of Chapter IIIC were very generous and active measures could

not be taken for its implementation. UIBs continued to accept deposits without

any problems. “However, in 1997 the Government of India amended the RBI Act

(Section 45s) to prohibit deposit taking activities of UIBs. As per the RBI

(Amendment) Act 1997, effective from April 1, 1997, UIBs are prohibited from

accepting any deposits from the public. However, an individual or a partner of a

firm is permitted to collect deposits from relatives (22 categories) as specified in

the Act and also borrow from banks and financial institutions to carry on the

business”. Existing public deposits were required to be paid back either on

maturity or within three days from April 1, 1997. Furthermore, UIBs are

prohibited from issuing advertisement for mobilising deposits. As per the

amendment, contravention of the provisions of Section 45S is considered as an

offence punishable with imprisonment or with fine.

“Even though the RBI Act prohibits money lender from accepting

deposits from public, due to lack of effective mechanism and machinery for the

supervision and inspection, most of the money lenders continue to accept

deposits from the public”. However, in records submitted to the offices of IACs,

deposits may be shown against the names of specified relatives or simply shown

34

as owner’s capital. For effective implementation of RBI provisions, the State

Government should have efficient machinery for monitoring and supervision of

money lenders, which is lacking.

Financial Companies Regulation Bill 2000

Another significant development in the area of regulation of deposit

taking activities of UIBs is the Financial Companies Regulation Bill, 2000. “It is

an outcome of the Report of the Task Force constituted by the Government of

India, (Chairman: Shri. C.M. Vasudev) to evaluate regulatory and supervisory

framework for NBFCs and UIBs. To implement the recommendations relating to

statutory amendments, the Government has framed the Bill. The Bill also

consolidates the laws relating to NBFCs and UIBs with a view to ensure

depositors protection”. The Bill contains new legislation to amend and

consolidate the provisions contained in Chapter IIIB, IIIC and V of the RBI Act,

1934. Now it is the Finance Companies Act 2000.

Kerala Money Lenders Act, 1958

The Kerala Money Lenders Act 1958 is an Act ‘to provide for the

regulation and control of the business of money-lenders in the State of Kerala’.

The Act intends to legalise the interest to be charged by money-lenders and to

afford protection to borrowers. Thus, “the original Act was passed basically for

the interest of the borrowers. There had been 12 amendments to the Act till 2004.

When the third amendment to the Act was proposed in 1983, (The Kerala

Finance Act 1983) it was challenged in a number of original petitions”. On that

occasion, the High Court held that the regulations introduced by the amendments

were only measures necessary to safeguard both depositors and borrowers from

35

the free dealing of money-lenders. Thus, the high Court considered that one of

the purposes of the Act is also to safeguard the interest of depositors.

According to KMLA 1958, “for the purpose of regulation of the money

lending business and to ensure compliance with the conditions of the licence, the

licence fee is collected, the penalty is imposed, the prosecution is ordered and the

licence is cancelled. Furthermore, security is demanded and additional security is

called for. However, all these provisions are either not very stringent or they can

be easily violated without much punishment. Under the KMLA, 1958, the

conditions for granting money-lending licence are very simple”.

They are:-

i. Payment of a licence fee;

ii. Payment of security deposit (in relation to loans advanced); and

iii. Deposits shall be accepted only in accordance with the provisions of the RBI

Act and rate of interest on deposits not exceeding the rates fixed by the RBI

Act for NBFCs.

According to KMLA, 1958, “the money-lender can charge interest on any

loan at a rate not exceeding two percent above the maximum rate of interest

charged by commercial banks on loans granted by them. With the deregulation of

interest rate on loans charged by the commercial banks, there was some

ambiguity regarding the rate of interest which money-lenders can legally charge

from borrowers. Following this, in March 2005, Government of Kerala fixed the

maximum interest rate on loans at 12 percent per annum. Needless to mention,

no financier provides loans at the prescribed interest rate”.

36

Under the Act, “any inspector or licensing authority has the power to enter

and search the places of business of the money-lender, but they are not allowed

to enter or search in residential building or premises without specifically

authorised in writing by the Member, Board of Revenue”. This is a hindrance for

conducting inspection in case of defaulting money-lenders. Under the Act, “the

punishment for charging higher rate of interest than what is shown in the

accounts or Act, is imprisonment which may extend to six months or a fine

which may extend to Rs.1000 or both. In case money-lender molests or abets the

molestation of any debtor for the recovery of any loan, the punishment is

imprisonment (maximum 6 months) or with fine of maximum Rs.1000”.

Furthermore, whoever undertakes business of money lending without a licence,

the punishment is only a fine of Rs.1000, which is paltry compared to the volume

of business they are undertaking. In Kerala, where indebtedness to money

lenders is very high, the role of the police in administrating the KMLA, 1958 was

very limited because none of the sections of the Act were effective. This was

“mainly because the punishment imposed was not severe enough. The concern of

the police was that suicides had been taking place because of the pressure tactics

adopted by money lenders. In view of the above drawbacks, it is imperative to

amend the KMLA, 1958 to enhance the licence fee, prescribe higher amount as

security deposit, impose more severe punishment for erring money-lenders and

provide more powers to inspecting officers for search in residential buildings”.

The security deposit allowed under the KMLA, 1958 is not effective. It is

a common practice that firms generally show very small amount for the

scheduled lending so as to avoid providing higher security amount. Since there is

no effective way of checking the true volume of business brings out by them, this

practice has been taking place for years. Here it may be illustrious that security

37

deposit is an applied measure and not a source of revenue for the state

Government, as Government is paying interest on it. Furthermore, under KMLA,

1958 there are “six slabs for deciding the amount of security deposit which is not

fixed scientifically as the effective rate of security deposit vary from slab to slab

and it declines after the third slab ( in case of both minimum and maximum

amount of loans in these slabs). In case of last slab, the effective rate is very low-

less than one percent in case of loans above 50 lakhs”. Thus, the prevailing slabs

of security deposits favours big financiers as they need to make less amount of

security deposit relative to their level of loans.

Legal control and supervision – Present scenario

The Commercial Taxes Department (CTD) treats money lenders as a

source of small revenue of the State and it is not seriously involved in their

monitoring and supervision. Since the main concern of CTD id the collection of

taxes in the State, it finds only a limited time to deal with the money lenders. The

CTD only makes sure that firms pay the stipulated licence fee and provide the

stipulated security deposit with the State Treasury, when the financiers approach

for new licence or for renewing the existing licence. In reality, “there is no

supervision, control and monitoring except collecting the registration fee and

keeping the related documents. Offices of the IACs receive complaints from the

public but it is difficult for them to enquire into the details as they are not

equipped for conducting an enquiry. Moreover, even if a financier is found to be

conducting illegal business, the punishment under the KMLA, 1958 is very low

as mentioned earlier. It is essential that money lenders need to be supervised

effectively to avoid illegal business practices, absconding cases, non-payment of

depositor’s money, harassment of borrowers, etc”.

38

Kerala Prohibition of Charging exorbitant Act, 2012

Carrying on the business of money-lending without licence and violation

of the conditions of licence is an offence illegal under the Kerala Money Lenders

Act, 1958. Moreover, there is no effective mechanism to control charging of

exorbitant interest in the business by the money-lenders in Kerala. Therefore, “in

order to release the general public from the difficulties being experienced by

them by falling prey to any person charging exorbitant interest in the names like

daily vatti, hourly vatti, kandhu vatti, meter vatti, thandal, the Government

consider it necessary to enact a new legislation, in the public interest, to prohibit

lending money for such exorbitant interest and to provide stringent punishment

thereof”. A three year term of imprisonment as punishment for charging

exorbitant interest, unlike the earlier Act under which the lender was only liable

to pay the excess interest along with a penalty.

Operation Kubera – An initiative of Kerala Government to protect

borrowers from money lenders

This is a drive against money lenders who are making problems to the

borrowers now days. Government designed this drive against money lenders who

charge exorbitant interest and make troubles to borrowers. Many suicides are

reported against them. Loan sharks are rearing their heads again in the state as

the much-hyped Operation Kubera lost its steam. The police began a crackdown

on illegal money lenders fleecing people in need of money by offering quick

loans at exorbitant rates across the state.

They recovered hundreds of title deeds, blank cheques, promissory notes

and Rs 4.94 crores in cash and arrested 2,594 fly-by-night lenders. Charge sheets

were filed against 2,459 and 1,373 remanded. It also exposed the police-blade

39

mafia nexus, and seven officers faced disciplinary action. There were even

widespread allegations of police misusing 'Operation Kubera' to mount unholy

pressure on those who had lent money for legitimate purposes. The government

even announced the holding of adalats in districts to consider complaints against

the blade mafia.

Conclusion

Growing indebtedness is believed to be one of the direct reasons for

suicides committed by borrowers. Though the money lenders account for a lower

share of loans availed by them, the pressure exercised by them are too painful to

withstand when compared to pressure by formal sources of borrowing and hence

they are also held responsible for the suicides committed by borrowers. There are

divergent views on the effectiveness of legal supervision on informal credit

markets. The effectiveness of provisions on the money lenders are less and need

to be revised.

40

CHAPTER 6

DATA ANALYSIS AND INTERPRETATION

Introduction

This chapter explains the profile of borrowers, their borrowing habits i.e.

the reasons of borrowing, repayment, default in payment etc., The project

covered all over Kerala. The project is based on descriptive research approach

using primary and secondary data. Structured questionnaire is used to collect

information from respondents. Multi stage sampling is administered to select

samples from the population. In the first stage, Kerala is divided into three

regions, i.e. south, north and central. From among these regions, seriously

affected districts are selected i.e. Alappuzha, Thrissur and Wayanad. A list of

borrowers is prepared in each district. Among them 150 respondents are selected

by using lottery method. Thus total sample size is 450.

Respondents Age:

Table No.6.1

Age of Respondents

Age No. Of Respondents % of respondents

Below 21years 5 1.1

21-30 56 12.44

31-40 90 20

41-50 177 39.33

Above 50 122 27.1

Source: Primary data

41

Figure No.6.1

Age of Respondents


It is clear from the Table No.6.1 that majority of the borrowers are above

41years.

Marital status and Size of the family:-

Table No.6.2

Size of the family

No.of Children No.of respondents % of respondents

1 5 1.13

2 100 22.72

3 127 28.86

4 156 35.45

5 & above 52 11.81


42

Figure No.6.2

Size of the family


Out of the respondents 2.22 percent(10) are unmarried, 17.04 percent (75)

are separated. Majority of the borrowers have large families with 2, 3 or 4

children.

43

Source of Income:-

Table No.6.3

Source of Income

Sources of income No.of respondents % of respondents

Employed with regular income 66 14.66

Employed with irregular income 186 41.33

Unemployed 112 24.88

Self employed 86 19.11


Figure 6.3

Source of Income


44

It is clear from the Table No.6.3, 41.33% borrowers are employed but

their income is not regular. So that they are in need to borrow from money

lenders for their livelihood at high interest rate.

No.of current loans from money lenders:-

Table No.6.4

No.of current loans from money lenders

No.of current loans frommoney lenders

No.of respondents % of respondents

1 387 862 36 83 14 3.114 9 25 4 0.88


Figure No.6.4

No.of current loans from money lenders

Source:Primary data

45

It is clear from the table No.6.4, 86 percent of the respondents have at

least one loan from money lenders presently. 8 percent respondents have two

loans, 3.11 percent have three loans, 2 percent respondents have three loans and

0.88 percent has five loans at a time.

Size and types of loans from money lenders:-

Table No.6.5

Amount borrowed from money lenders

Amount borrowed No.of respondents % of respondents

Upto 50000 68 15.11

50001 - 100000 104 23.11

100001 – 200000 171 38

200001 – 300000 41 9.11

300001 – 400000 27 6

400001 – 500000 23 5.11

Above 500000 18 4


Figure No.6.5

Amount borrowed from money lenders

46


100001 to 200000 is the range of loan borrowed from the moneylenders.

Very less borrowers i.e. 4 percent are borrowed big amount. It is to noted at the

time of data collection, the phenomenon of the continuous loan i.e. loans that are

renewed again and again from the same money lenders as soon as (or sometimes

before) they were paid off. This can be characterised as a form of revolving

credit. 67 percent of the respondents have continuous credit from the same or

number of money lenders.

47

Other loans:-

Table No.6.6

Other loans of Borrowers

Other loans No.of respondents % of respondents

Housing loan 256 56.88

Vehicle loan 135 30

Educational loan 9 2

Personal loan 50 11.11


Figure No.6.6

Other loans of Borrowers


48

All respondents have other loans like housing loan (57%), vehicle loan

(30%), personal loan (11%) and educational loan (2%). These loans are generally

from different sources like banks, NBFCs etc.

Reasons why respondents borrowed from money lenders as against other

forms of credit:-

Table No.6.7

Reasons of borrowings

Reasons No.of respondents % of respondents

Only credit option 189 42

Ease of getting money 126 28

Relative/friend suggested it 54 12

Money lender offered money 41 9

Tradition in family 27 6

Others 13 3


49

Figure No.6.7

Reasons of borrowings


The main reason given for choosing money lenders is because respondents

believe themselves as having no other source of credit. 42 percent feel that they

have no other option but to borrow from a moneylender (Table No.6.7). The

second major reason is the accessibility or ease of getting fund from money

lenders (28%). Credit from money lenders is always on one’s own doorstep and

this can be a big incentive for people who may find it difficult to approach a bank

or other lending institution for loan. The formality of conventional credit sources

may make them off-putting for low income groups. In addition, some

respondents were either illiterate or had literacy problems. Thirdly, there was the

traditional factor i.e. 12 percent of respondents the suggestion or idea of using a

moneylender come from either a friend or family member. There is a tradition of

borrowing from moneylenders among 6 percent respondents’ family and friends.

9 percent respondents accept loan offered by moneylenders when they are in

50

financial crisis and finally 3 percent respondents have some other reasons to

borrow from moneylenders.

Reasons for taking out loans from moneylenders:-

Table No.6.8

Reasons for borrowings from moneylenders

Reasons No.of resondents % of respondents

Festivals like Onam, Christmas, Ramzan etc.

108 24

House/Furniture related 72 16

Food and daily living costs 27 6

Childrens’ clothes, shoes, fees etc.

54 12

Pay other loans 72 16

Wedding/Funeral/Birth 77 17

Others 41 9


51

Figure No.6.8

Reasons for borrowings from moneylenders


The high use of money lending for overcoming the expenses relating to

the festivals like Onam, Christmas, Ramzan etc. 28 percent respondents are

borrowed for these purpose. The other major reasons are wedding or funeral or

birth (17%), repayment of other loans (16%), furniture or house construction

related expenses (16%), payment for children education fee payment, clothes,

shoes etc (12%). and 6 percent are used to buy food and daily expenses.

52

Factors precipitating borrowing from moneylenders:-

Table No. 6.9

Factors precipitating borrowing from moneylenders

Factors No.of respondents % of respondents

Inadequate income 139 31

Routine bills 76 17

Unemployment of self/spouse 18 4

New home 45 10

Alchohol problem 28 6

Special event 36 8

Purchase of household/vehicle 22 5

Separation 22 5

Ill health and medical expenses 36 8

Wedding/death/birth 28 6


53

Figure No. 6.9

Factors precipitating borrowing from moneylenders


The respondents can be divided into two halves:-

1. Those for whom there is no single precipitating factor; and

2. Those who started for a specific reason or occasion.

The first grouping contains people whose incomes were generally

insufficient to meet their routine outgoings, while those in the latter group started

borrowing at a particular period in their lives or for a specific reason or occasion.

Some of these crisis events are as follows:-

1) Inadequate income

2) Routine bills

3) Unemployment of self/spouse

4) New home

54

5) Alcohol problem

6) Special event

7) Wedding/death/birth

8) Ill health and medical expenses

9) Separation

10) Purchase of household/vehicle

A key factor in the relationship between debt and life-events or crisis is

when a sudden drop in income or a sudden rise in expenditure takes place. This

has also been found to be a central factor in indebtedness by research elsewhere.

It suggests that individuals or families going through a life-event crisis are

vulnerable to becoming indebted to moneylenders and may benefit from

intervention at this stage. It also raises the question of whether families on social

welfare should be better assisted to cope with events such as births and deaths.

Reasons why Respondents Access to Banks and other credit institutions:-

Table No.6.10

Reasons why Respondents do not use Banks and other credit institutions

Reasons No.of respondents % of respondents

No savings or collateral 184 41

Unemployed not given loans 62 14

Problems repaying previous loans 41 9

Not having Account 50 11

Never thought of it 36 8

Unsuitable hours or location 32 7

Others 45 10


55

Figure No.6.10

Reasons why Respondents do not use Banks and other credit institutions


In the context of alternatives to money lending, respondents’ access to

banks and other credit institutions is an important factor. Other credit institutions

are more popular than banks among the sample, neither were widely used. Only

11 percent have account with either bank or a credit institution. Unemployment

(41%), lack of savings and collateral (14%) etc. cause difficulties getting loans

from banks and credit institutions. This has important policy implications and

confirms that these people from low income families are not linked into the

mainline sources of credit. Interestingly, the perceived obstacles for the use of

both banks and credit institutions are fairly similar; mainly lack of savings or

collateral and inability to fulfil other conditions such as having an account or in

the credit institutions being a member. 7 percent feel that these institutions are

56

not working their convenient hours or location, which are also make difficulties

to them.

Consequences of missing a repayment of loan:-

Table No.6.11

Consequences of missing a repayment

Consequences No.of respondents % of respondents

Aggression or intimidation 252 56

Make double payment the following week

68 15

Levy/fine/fee imposed 116 26

Court action threatened 5 1

Would not get another loan 9 2


Figure No.6.11

Consequences of missing a repayment


57

Strong negative reactions, frequently associated with money lenders, are

common. It is clear from the table No.6.11 that, there is evidence that many

respondents are quite frightened of the consequences of failing to make

repayments. In 56 percent of cases the money lenders are reported to have

reacted to a missed repayment with either annoyance or anger – typically

threatening adverse consequences, such as a visit from ‘the boss’ or cutting off

future credit, if the repayments are missed more than a few weeks. Their loans

are a high level of stress on these borrowers. 15 percent reported negative

consequences of missing repayments included making a double repayment the

following week, being threatened with court action (1%), the imposition of a fine

or fee (26%) and being warned that one would not be granted another loan from

that lender (2%). The consequences also depended on the amount of repayments

that were missed; more extensive arrears lead to more serious consequences,

such as the ‘boss’ calling to the borrower’s home or women borrowers being

threatened that their husbands would be informed of their loans.

58

Feelings about loans from money lenders:-

Table No.6.12

Feelings about loans from money lenders

Feelings No.of respondents % of respondents

I just hate it, feel degraded 131 29

Causes me worry even be ill 80 18

I feel I was stupid to get involved 59 13

It was great when I got the loanbut is awful paying it back

27 6

I won’t take another loan 41 9

I feel bad about it but I wouldtake another loan

22 5

I have considered suicide 90 20


59

Figure No.6.12

Feelings about loans from money lenders


The most common feelings are of dislike at being indebted to money

lenders (29%) and being under mental pressure (18%). Further 53 percent

respondents feel angry at their own stupidity in taking out the loans. People’s

negative feelings are generally directed towards themselves – when they feel

angry it was at them getting involved; when they feel degraded by their loans it is

turned inwards to reduce their self esteem; they sometimes considered to commit

suicide.

60

Correlation analysis

It is important to consider the relationship between the family income of

the respondents and size of their loan from money lenders. Correlation analysis is

used to find out the relationship between family income of the respondents and

size of their loan from money lenders. R = -.967 which shows there is high

negative correlation between these two variables. From this analysis it is clear

that these two variables are high inverse relation. Thus, it can be concluded that

when the income of the family increases, the size of the loan taken from money

lenders decreases.

Factor analysis

The factors precipitating to take loans are Inadequate income, Routine

bills, Unemployment of self/spouse, New home, Alcohol problem, Special event,

Wedding/death/birth, Ill health and medical expenses, Separation, Purchase of

household/vehicle etc. The other factors which have a bearing on these are family

income, family life style etc. A simple factor analysis is considered to analyse

whether the above mentioned variables are associated with the basic variables i.e.

income and life style. If it is associated, how much the association?

61

Result of Factor Analysis

Table No.6.13

Result of factor analysis

Variables Factor 1 Factor 2

Inadequate income 0.65 0.12

Routine bills 0.12 0.61

Unemployment of self/spouse 0.54 0.07

New home 0.09 0.57

Alcohol problem 0.06 0.70

Special event 0.08 0.62

Wedding/death/birth 0.6 0.51

Ill health and medical expenses 0.09 0.47

Separation 0.49 0.21

Purchase of household/vehicle 0.06 0.55


It is clear from the Table No.6.13 that the variables like inadequate

income, unemployment of self/spouse and separation are closely related to factor

1 (family income). And the other variables like routine bills, new home, alcohol

problem, special events, wedding/death/birth, ill health and medical expenses and

purchase of household / vehicle are related to factor 2 (family life style).

One – Way ANOVA

The respondents are categorised into the following age groups: below 21,

21 to 30, 31 to 40, 41 to 50 and above 50. It is to be noted that high mental stress

is feel by the respondents due to their credit with money lenders. So that it is

62

relevant to know whether there is any relationship between age of the

respondents and the stress created by their loan from money lenders.

Result of One-way ANOVA

H0: All the age groups have equal stress on the average or µ1=µ2=µ-

3=µ4=µ5, where µ1,µ2,µ3,µ4,µ5 are mean stress scores for the three age groups.

H1: The mean stress of at least one age group is significantly different.

Table No.6.14

Result of One-Way ANOVA

Sources ofvariation

Sum of SquaresDegree offreedom

Mean square

Between samples SSC= 1.33 45 MSC=0.44

Within samples SSE=13.78 404 MSE=0.63

Total SST=15.11 N-1=449

Significance level: 5%

Table value = 3.01. The null hypothesis is accepted. All the age groups

have equal stress due to the loan from money lenders. Age of the respondents

does not make any differences in their stress. Once they took loan from a money

lender, the stress and problems associated to that is going own.

63

CHAPTER 7

FINDINGS, SUGGESTIONS AND CONCLUSION

Introduction

Anecdotal evidence and media images tended to sensationalise money

lending, portraying moneylenders as the exploiters of the vulnerable, as usurers

who make large profits on the backs of the poor and the weak. How true is this?

This is the basic motive of this project. Additionally, it is an attempt to identify

the reasons why people turn to money lenders from credit. The project studied

the consequences of the money lending in the life of borrowers, the failure of

financial system to support the low income people and how the private money

lending business is growing to the heights.

The major findings of the project

1. The costs of credit from money lenders are very high. The interest rate

may go to 140% in certain cases.

2. Moneylenders are operated without scrutiny and are not subject to any

mechanisms of other forms of credit.

3. The activities of moneylenders are flourishing due to the following

reasons:-

a. Disproportionate consumerism of the people;

b. Borrowing for recompense of dowry;

c. Construction of house;

d. Medical treatment;

e. Payment of bills/fees/loans etc.;

64

f. Purchase of household/vehicle;

g. Irregular income and unemployment;

h. Special events and festivals.

4. The regulation and control over the money lenders should be strict. The

KMLA, 1958 is very weak on the following grounds:-

a. Generous situations for the grand of licence;

b. Minimal licence fee;

c. Insufficient security;

d. Immaterial punishment for violation of provisions;

e. Less powers for inspecting officials; and

f. Silent on deposit taking activities.

5. The Commercial Taxes Department treats money lenders simply as a

source of small revenue, so that there is no system of regular inspection of

their accounts and supervision of their activities.

6. Kerala Prohibition of exorbitant Interest Act 2012 helpful to some extent

to protect the interest of borrowers.

7. Operation Kubera is a new initiative against lucrative moneylenders,

through which many complaints are received and solved by the

Government.

8. Majority of the borrowers are middle and upper aged persons.

9. Majority of the borrowers are married and having children. One of the

reasons to take loan is for well functioning of the family.

10. The range of their loan amount is 100000 to 300000.

65

11. Majority of the borrowers have other loans like housing loan, personal

loan, vehicle loan etc.

12. The main reason given for choosing money lenders is because respondents

believe themselves as having no other source of credit. Another reason is

the accessibility or ease of getting fund and some may find it difficult to

approach a bank or other lending institution for loan due to either illiterate

or had literacy problems.

13. The high use of money lending for overcoming the expenses relating to

the festivals like Onam, Christmas, Ramzan etc. The other major reasons

are wedding or funeral or birth, repayment of other loans, furniture or

house construction related expenses, payment for children education fee

payment, clothes, shoes etc. and buy food and daily expenses.

14. The respondents can be divided into two halves:-

a. Those for whom there is no single precipitating factor; and

b. Those who started for a specific reason or occasion.

15. Inadequate income, Routine bills, Unemployment of self/spouse, New

home, Alcohol problem, Special event, Wedding/death/birth, Ill health

and medical expenses, Separation and Purchase of household/vehicle are

the specific reasons or occasion for starting to take loan from money

lenders.

16. Reasons of not Access to Banks and other credit institutions for credit are

unemployment, lack of savings and collateral, not having an account or in

the credit institutions being a member and working hours or location of

these institutions make difficulties to them.

66

17. Consequences of missing a repayment of loan are aggression or

intimidation makes double payment the following week, Levy/fine/fee

imposed etc.

18. Feelings about loans from money lenders of dislike at being indebted to

money lenders and being under mental pressure. They feel angry at their

own stupidity in taking out the loans. People’s negative feelings are

generally directed towards themselves – when they feel angry it was at

them getting involved; when they feel degraded by their loans it is turned

inwards to reduce their self esteem; they sometimes considered to commit

suicide.

19. There is high negative correlation between family income of borrowers

and the size of loan from money lenders.

20. The reasons for taking loan from money lenders can be falling under the

two basic factor i.e. family income and family life style.

21. All the age groups have equal stress due to the loan from money lenders.

Age of the respondents does not make any differences in their stress.

22. The reasons of borrowers suicides are:-

a. Negative consequences of having loan;

b. Lack of support from friends/ relatives/family;

c. Difficulty in getting financial assistance from formal sector;

d. Lack of protection from the illegal practices from the authorities;

e. Problems in regularity of repayment of loan.

67

23. Drawbacks of present financial system:-

a. All the provisions in KMLA to protect borrowers are either not

rigorous or they can be easily violated without much punishment.

b. In March 2005, Government of Kerala fixed the maximum interest

rate on loans at 12 percent per annum, but no financier provides

loans at this rate.

c. Under the Act, any inspector or licensing authority has the power

to enter and search the places of business of money-lender, but they

are not permitted to enter or search in residential building or

premises without specifically authorised in writing by the Member,

Board of Revenue. This is a difficulty for conducting inspection, in

case of defaulting money lenders.

d. In Kerala, where indebtedness to money lenders is very high, the

role of the Police in administering the Kerala Money Lenders Act,

1958 was very inadequate because none of the sections of the Act

were defective.

e. There is no regulation, control and checking except collecting the

registration fee and keeping the related documents.

Suggestions

The government wants to recommend the interest rate on loans; it needs to

notify a precise rate regularly.

68

The government impose more severe punishment from blundering money

lenders and provide more powers to inspecting officers for search in

residential buildings.

It is authoritative to amend the provisions to effectively control and

administer the working of money lenders and to protect the interest of

depositors.

The government may set up a distinct department for policy formulation,

monitoring and supervision of money lenders.

SHGs need to be encouraged throughout the state for eradicating poverty,

generation of employment opportunities, providing small and medium

finance for low, irregular income and unemployed groups for making their

life independently.

Co-operative institutions and SHGs are to be maintained in remote areas

and places where money lenders are bourgeoning.

Awareness campaigns can be given through Panchayath and Block level

to understand the availability of financial assistance from formal sector

and problems and consequences of taking loans from money lenders.

Conclusion

In Kerala, both formal and informal financiers remain to do business, and

over time the role of formal financiers get reduced with the spread of more

informal institutions. Since the provision of formal financial service is

relatively costly, the process of replacing the informal financiers requires

major developments in operation. The strict rules and regulations of the

69

formal sector limit the low income or unemployed people to access the

financial facilities. They choose money lenders when they sandwiched

between difficulties getting fund from formal sector and financial problems.

Money lenders are exploiting them for making their profits. In such situation,

government interventions to protect the interest of the borrowers are

negligible. ‘Operation Kubera’- an initiative by Government of Kerala to

protect borrowers from money lenders did some measures which give relief

to the affected people. But this has lost its power due to lack of proper control

and supervision continuously.

70

References

1) Basu, Priya (2005): “ A Financial System for India’s Poor”, Economicand Political Weekly, September 10, pp. 4008-4012.

2) Reserve bank of India (2006): Annual Policy Statement for the Year 2006-07, April 26.

3) Malayalam (2001): “The Blade that Injures the Society”, MalayalamArticle.

4) Bouman, F.J.A.(1989): Small, Short and Unsecured: Informal RuralFinance in India, Oxford University Press, Delhi.

5) Government of Tamil Nadu (1997): Tamil Nadu Government gazette,Extraordinary, August 14.

6) Reserve Bank of India (1954): All India Rural credit Survey – Report ofthe Committee of Direction, RBI, Mumbai.

7) State Planning Board(2005): Study Report of the Working Group on Non-Banking Financial Institutions in Kerala”, Thiruvanathapuram.

8) State Planning Board (2006): “Draft Approach paper for Kerala’sEleventh Five year Plan”, Thiruvananthapuram.

9) Reserve Bank of India (2007): Report of the TechnicalGroupto ReviewLegislation on Money Lending, RBI, Mumbai.

10) Mohankumar,S. And R.K.Sharma (2006): “Analysis of farmer suicides inKerala”, Economic and Political Weekly, March 18, pp. 1552-1558.

11) Sugathan.N(2005): Kerala Money Lenders Act, 1958, Third Edition,Swamy Law House, Cochin.

12) NSSO (2005): Situation Assessment Survey of Farmers – Indebtedness ofFarmer Households, NSS 59th Round (January – December 2003, ReportNo.498 (58/33/1), Government of India, May.

71

13) Reserve Bank of India (2007): Report of the TechnicalGroupto ReviewLegislation on Money Lending, RBI, Mumbai.

14) State Planning Board(2005): Study Report of the Working Group on Non-Banking Financial Institutions in Kerala”, Thiruvanathapuram.

15) Reserve Bank of India (1966): Report of the All India Rural CreditReview Committee, RBI, Mumbai.

16) Reserve Bank of India (2000): “All India Debt and Investment Survey,1991-92: Incidence of indebtedness of Households”, Reserve Bank ofIndia Bulletin, February, pp.83-103.

17) Reserve Bank of India (2001): Report on Trend and Progress of Bankingin India 2000-01, RBI, Mumbai.

18) Malayalam (2001): “The Blade that Injures the Society”, MalayalamArticle.

19) Sugathan.N(2005): Kerala Money Lenders Act, 1958, Third Edition,Swamy Law House, Cochin.

Bibliography

1) Adler, M., 'The economic and social situation of consumers in debt in

Great Britain', in G. Hormann (ed.), Consumer Credit and Consumer

Insolvency. Bremen: University of Bremen Press, 2000.

2) Adler, M. and E. Wozniak,.The Origins and Consequences of Default: An

Examination of the Impact of Diligence. Research Report for the Scottish

Law Commission No. 5. Glasgow: HMSO, 1981.

3) Andrews, A. and D. Houghton, How to Cope with Credit and Deal with

Debt. London: Unwin, 1996.

4) Andrews, A., 'The borrower, money advice and the need for reform', in

Report of Symposium on Money and the Consumer. London: The Money

Management Council, 2007.

72

5) National Consumers' Council, Consumers in Debt. Report of Conference.

London: National Consumer Council, 1996.

6) National Consumers' Council, Credit: Access or Excess. Report of

Workshop. London: National Consumer Council, 1987.

7) Townsend, P., Poverty and Labour in London. London: Low Pay Unit,

2007.

8) Walker, A. and C. Walker (eds.), The Growing-Divide. A Social Audit

1992-97. London: Child Poverty Action Group, 1997.

9) Williams, J. and B. Whelan, Report on Survey of Saint Virlcerzt de Paul

Conferences. ESRI report for Society of Saint Vincent de Paul, 2005,

(unpublished).

10) Gupta, Neeethi, Indian Financial System, Kalyani Publishers, 2004, New

Delhi

Websites

www.keralataxes.gov.in/documents/KML%20ACT.pdf

www.lawsofindia.org/.../TheKeralaProhibitionofChargingExorbitantInterestAct2

012.

indiabudget.nic.in/ub2000-01/mem/mem1.pdf

www.google.com

73

http://www.google.com/

http://www.lawsofindia.org/.../TheKeralaProhibitionofChargingExorbitantInterestAct2012

http://www.lawsofindia.org/.../TheKeralaProhibitionofChargingExorbitantInterestAct2012

http://www.keralataxes.gov.in/documents/KML%20ACT.pdf

private money lending market and borrowers’ … · 2002-03. the share of moneylenders in total...

Documents