Published On : Fri, Jan 8th, 2016

City’s vulnerable class in grip of syndicate of private financiers

Nagpur: A syndicate or say mafia (awful word but it is true) of over two dozen private financiers, it seems, have spread a cobweb in the Second Capital City of Nagpur and are trapping the vulnerable class of the society. Those who are trapped are offered ‘handsome’ loans but with interest well above the market rates and other riders. The game plan of this syndicate of private financiers is diabolic, to say the least. The debtor goes on paying the interest amounts for most of his or her lifetime. And if the debtor fails to pay the high rate of interest, his or her property is usurped by the private financiers. A win-win situation for the syndicate. This illegal business is going on since years that too out of reach of long hands of law and its enforcers.

According to sources, Nagpur District alone has the network of over two dozen private financiers who are armed with same number or more dalals and henchmen. The dalals are the facilitators of deals between the financiers and the vulnerable class of people. It is a known fact that if a dalal brings a property-holder customer to a private financier then the value of the property nosedives in market. The private financier then bargains and offers only 60 percent of finance of the property value. When the deal is struck, the property-holder is forced to go for ‘agreement to sale’ in favour of the financier. (Remember, this agreement is done on the original valuation of property). The customer is forced to cough up 8 percent Stamp Duty, 1 percent Registration Charge, 1 percent DTS. It means total 10 percent amount of the deal is spent by the customer. The sum is deducted by the financier while giving the financed amount, said the sources.

Sources further said that once the deal is finalized, the private financier takes in his possession the ‘agreement to sale’ and ‘property possession letter.’ Three percent of interest per month is recovered on immediate basis from the customer against the financed amount. The dalal also gets his share in the pie. The customer pays 2 percent of the financed amount as dalali (brokerage) to the ‘all important dalal.’

An example could give an idea of the ‘fleecing deal.’

For a property valued at Rs 1 crore:

• Rs 60 lakh are given as finance
• Rs 10.5 lakh are spent on ‘Agreement to sale.’
• Rs 1.2 lakh is given as dalali

It means, the customer is getting the actual finance of Rs 48.3 lakh only. If the customer has taken the finance for the period of one year, he pays 55 percent extra against the finance of Rs 60 lakh then only his or her property is free from all shackles. Some of the two dozen private financiers ‘actively busy’ in Nagpur include a Dhantoli-based “AA,” Sadar Gandhi Chowk-based “PA,” Ramdaspeth-based “SA,” Gokulpeth-based “JK,” East Nagpur-based “DA” to name a few.

Ironically, this business does not require ‘licence’ as there is no mention of finance when the ‘agreement to sale’ is negotiated between the financier and the customer. The vulnerable class that gets trapped in the ‘cobweb’ of private financier syndicate includes small time builders, bankrupt businessmen etc apart from needy customers.

Nagpur City is emerging as “stronghold” for the notorious private financier syndicate which controls swathes of the city’s vulnerable class. Need is being felt for new laws to “stamp out” the syndicate’s influence. Its influence is spreading across the city and district with the “gang” acquiring footholds in in the ‘illegal business.’

– Rajeev Ranjan Kushwaha ( )