120% Interest on Loans: Pawn Shops Are a ‘Killer’ in Small UP Towns | News from Meerut

MEERUT: Ashish Gupta, 42, a small pharmacist in Shahjahanpur (UP), was found hanged with his wife Rishu, 39; son, 12, and daughter, 9, on June 7. Wanting to build a house and expand his business, he had taken a loan of Rs 12 lakh from an informal lender after his bank loan approval was not accepted. In two years, he had repaid Rs 37 lakh – he was charged 120% annual interest. But the principal amount remained unchanged. He saw no end to his debt.
Predatory lending is designed to fail. They mean no paperwork, no background checks and instant cash, but they also trap borrowers in cycles of debt that they can’t get out of. And they’re weeding out small town UP borrowers, literally “killing” them.
“Ashish was murdered. These loan sharks killed my son. It was not suicide, said Ashok Gupta, her father, a retired doctor. Pawnbroker Avinash Bajpai has been arrested.
Prince Sonkar, 26, owned a small vegetable and fruit shop in Lucknow. In August last year, he consumed poison and died after months of harassment by pawnbrokers who lent him 20,000 rupees to expand his business. “He had repaid them double the amount,” his mother Jyoti said. “The men who pushed him to suicide are now out. There was no evidence.
Because of the way these loans are issued—there is no paper trail—it is difficult to obtain evidence of harassment. These lending markets are not regulated as they should be anyway. “Under the UP Money Lending Regulation Act of 1976, anyone can write to the Subdivision Magistrate, complete a form and become a licensed pawnbroker. The interest rate is not supervised by the government, said Rajveer Singh, a lawyer who helps people targeted by loan sharks. “The lenders take a minimum interest of 20 to 30%. When they find easy targets, like the illiterate or those in dire need, they shoot up to 100%. The lack of paperwork also means that borrowers often cannot seek help from the police unless things go wrong.
As in the case of Devender Saini, a day labourer, who entered the Meerut SSPon Tuesday and consumed poison in front of the cops, telling them that he had repaid Rs 2.5 lakh against a loan of Rs 1 lakh in 18 months and was still being harassed by the pawnbroker, Rinku Gujjar. Saini did not survive, leaving behind his wife and four children.
With a sense of shame and failure associated with borrowing, many of those who fall into the trap don’t tell their family – this ends up allowing lenders to default. Chandrapalwho bore his first name, was a 65-year-old teacher from Bareilly. “On June 30, he committed suicide. He left a suicide note, saying he had to take the plunge because of his debts. His family had no idea,” said Sanjeev Yadav, investigator in charge of the case. “In such cases, we have to rely on what the lender claims.”

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