NEWS WIRE: India: Children and Donkey Reportedly Taken Hostage After Missed Loan Payments to Unnamed Microfinance Insitutions

Source: The Telegraph (India).

Original article available here.

HYDERABAD, June 6 – A micro-finance company got a sweetmeat seller’s eight-year-old daughter kidnapped after he missed three EMI (equated monthly installment) payments on a INR 14,000 (USD 330) loan, police said.

Recovery agent Mangamma took away Swapna from her home in Kurnool district’s Velugodu town on Wednesday after failing to find her father Gokari Subbaiah either in the house or his shop.

Mangamma told the neighbours she was taking the girl to the company’s branch office at Nandikotkur, about 40km away, and that the parents must come there with the money if they wanted their daughter back.

The parents lodged a police complaint and accompanied officers to Nandikotkur and got Swapna freed on Wednesday night.

Subbaiah, who had borrowed the money five months ago, explained he had failed to pay three instalments because illness had forced him to close his shop for two months. This had led the company to slap him with a INR 4,000 (USD 90) fine over and above the interest.

After he reopened his shop last month, Subbaiah paid the last instalment and told the company he would gradually clear his dues but couldn’t afford to pay the hefty fine.

The company asked him to sell his house and his shop. After he refused, he says, the company’s agents beat him up twice, before his customers and his family.

Kurnool police chief S.K. Bagchi has told the Nandikotkur deputy superintendent of police to register a case of kidnapping against the company and Mangamma.

This is the third instance of a child being abducted by recovery agents in the Rayalaseema districts, where five micro-finance companies lend small amounts to petty traders to keep their day-to-day business going.

A vegetable vendor’s five-month-old baby was taken from him in Anantpur district last month and returned only after the mother paid the arrears after two days.

In another instance, a blacksmith’s wife and two-year-old child were taken captive for 10 days till he repaid the INR 12,000 (USD 280) he had borrowed to install a new furnace.

The most bizarre abduction took place in Marri Seenaiah village, where a washerman’s donkey was held hostage for five days.

Officers say the victims shy away from pressing charges under pressure from the trading community. “Such police cases would only bring trouble — no one would lend us money any more,” said Gurnath Rao, a community leader in Subbaiah’s hometown.

The police say they cannot act without a complaint. However, under pressure from the state human rights commission, they have registered abduction and assault cases against three companies and their agents.

The Supreme Court has compared banks’ loan recovery agents with “goons” because of the strong-arm tactics they adopt, often driving humiliated customers to suicide.

The Reserve Bank of India has threatened banks with action if their recovery agents harass or bully defaulters.

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