Crackdown on illegal moneylenders in the State continued on Monday, with the police launching raids of suspect premises in Kozhikode.

According to information reaching here, six people have been arrested with Rs 5 lakh in cash. Hundreds of blank cheques, stamp papers, and property deeds have been seized.

MORNING RAIDS

Twelve cases have been registered following the operation named Operation Octopus. T. K. Rajmohan, Superintendent of Police, Vadakara Rural, said the raids began at eight in the morning.

The action was initiated in view of an escalating trend in reported complaints of harassment or threats of harm and seizure of property from across the State in recent times.

Earlier last week, similar action in the State Capital had led to arrest of eight people, including history-sheeters; seizure of Rs 16 lakh in cash, blank cheques and promissory notes.

City Police Commissioner P. Vijayan had led the crackdown code-named ‘Operation Blade,’ after careful scrutiny and shadowing of suspects.

The pre-dawn swoop saw a posse of police descend on the premises of suspects during the small hours of the day, giving them very little chance to escape.

Despite strong presence of formal financial institutions like commercial banks and co-operatives, money lenders form an important segment of the financial sector of the State.

They engage in deposit taking and money-lending activities, and have been in existence for centuries in various forms, an occasional paper of the Reserve Bank noted.

Besides registered firms, there are numerous unregistered ones centred on individuals. They mainly operate out of own houses or business establishments.

There is no estimate of the number of money lenders in the unorganised sector, the paper observed.

Even people in the upper strata of the society like doctors, lawyers, bank employees, college teachers and politicians dabble in the trade.

Some loans are given for as short a period of 100 days or not exceeding six months. Generally, the repayment period of loan will not exceed 12 months.

In many cases, there is a practice of daily collection of loan amount. In case of the 100-days loan, the principal and interest is repaid daily in 100 equal instalments.

Daily collection is more prevalent among the traders and business people, the paper notes. It improves the liquidity position of financiers and in turn more loans are provided.

It is likely that year-end data on outstanding amount of loans may not reflect the actual volume of business undertaken.

In general, around two-third of the loans are given against security of gold. Interest rates vary from customer to customer.

vinson.kurian@thehindu.co.in

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