A different kind of Call money market in Andhra Pradesh (and a tragic one)..

Call money is something usually associated with money markets. The name literally means money is available on a call from a lender and to be delivered back to the lender on a return call. Nowadays it means a market where lenders lend their surpluses on an overnight basis (if weekend then 3 days) on an unsecured basis (no collateral). Accordingly, you have call market interest rates which have become the preferred way for targeting interest rates for central banks.

It seems there is a different call market existing in Andhra Pradesh which is more on traditional lines. Here, money is available on a phone call and is given back on a call. The interest rates are crazily high. In a real tragedy, one such family committed suicide as they could not pay back the interest after getting a call. Thiis how one got to know of this market. 

On Thursday morning, 36-year-old Siva Kumar, a resident of Diguvanagulavaripalle village in Chittoor district, took his family to the Ayyappa temple. After offering prayers, they rode on a mobike to neighbouring Errajivaripalem village. On the banks of the Sitamma lake, they then posed for a family photograph.  

It was a picture of a family on an outing — till all of them jumped into the water. Eyewitnesses said villagers tried to save the family of four — Siva Kumar, his wife Leelavathi (30) and their two children Naveen (8) and Kavya (6) — but failed. Their bodies were retrieved in the evening.

The mass suicide showed that the ‘call money lending’ racket in Andhra Pradesh has taken a deadly turn. The family has left behind a note naming the moneylenders whose harassment forced them to take the extreme step. Their neighbours too told the local media that Siva Kumar was being constantly harassed by moneylenders.

The ‘call money lending’ racket makes loans readily available on the basis of phone calls. The moneylender comes to the borrower’s doorstep with the cash and a promissory note. The interest rates range between 120% and 200%. The lender, similarly, can ask for the money back over the phone at any time. If the borrower can’t repay, life and property comes under threat.

It runs both deep and wide in Andhra Pradesh, evidence gathered by the police during raids in Krishna, Guntur, Kadapa, Prakasam, East Godavari and several other places show. The raids also exposed the deep-rooted association private moneylenders have with leaders of all political parties as well as some bureaucrats. The police also discovered how moneylenders threatened, coerced and dragged women into prostitution when they could not repay loans in time.

This is such a sad story. How distorted financial markets continue to create havoc with public. How people continue to avail loans from informal financial sector and pay via their lives. So many years of efforts of financial inclusion is still far from complete.

One also needs to note how such informal financial markets emerge and thrive with huge political support. This one uses technology to give money in a very prompt manner but on non-payment use the traditional coercive  ways to force repayment or think of other ways to escape.

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