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Cut the red tape

IFP Editorial: The Manipur government is still non-committal about the plight of investors of the unregulated private banks or financial institutions who were left high and dry.

ByIFP Bureau

Updated 4 Jan 2023, 9:02 pm

Representational Image (Photo: Pixabay)
Representational Image (Photo: Pixabay)

Compared to big private banks like Salai Group and a few others, Salam Bijen is just a small fry as they say in the world of fraudsters. Problem is there are hundreds like him and gullible people continue to fall prey to such frauds. Like all frauds, Salam Bijen alias Salam Boyai from Naransena Awang Leikai of Bishnupur district was sleek and impressive to his gullible clients. He went into hiding after allegedly scamming clients with promises of providing loans and collecting more than Rs 1 crore.

However, he was arrested by police recently. By hiding his true identity, Bijen ran an organisation called ‘Avatar Solutions’ and its office was opened at a rented place located opposite Airport Army Camp at Changangei Makha Leikai in Imphal West. He was running the organisation as its Managing Director by using a fake name i.e. Ksh Robindro Singh. From around 70 clients, he had collected more than Rs 1 crore with a business plan of letting them deposit only 25 per cent of a loan amount with the assurance that the total amount would be delivered after a period of 45 days.

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After collecting the hefty sum, he went into hiding. In the late 70s and 80s, a private bank named Satna Bank ran such a scam and went missing after collecting a huge amount of money. This is still going on in many corners of the state. The general trend is to form a joint action committee after the so-called MDs went missing. Some are caught and others are still in the radar. But the interesting question is, who are clients? Obviously, they are mostly people looking for easily available loans or high interest rates.

Why majority of the investors in the state choose private banks over nationalised banks. It is simply because the rate of interest is much higher compared to government banks. In the loan section, people opt for private banks as they provide easy loans though interest rates are high. The main reason of private banks booming in the state leaving nationalised banks behind, is because of easy accessibility, high interest rate, not having to disclose the source of fund and evading from paying tax. However, investing in a microfinance company is just like gambling.

The state government is still non-committal about the plight of investors of the unregulated private banks or financial institutions who were left high and dry. That the state government knew about the private banks or unlicensed financial institutions operating in the state cannot be denied as these institutions advertised in the open thereby collecting deposits or investments, whatsoever one chose to call it, on high interest rates.

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There were so many ‘investors’ from those with chunks of retirement benefits and not so legitimate persons with black money. These people might not pose problems for them, but it is great headache for those small investors with hard earned money and savings who are out to eke out a respectable income from the high interest rates to pay for education of their children and other domestic expenditures. But when the dam burst open, these small time investors are painted as gullible people and the state simply refuses to come to their aid while in a denial mode as to why the state let these private banks function and collect deposits and investments.

According to state Director of Institutional Finance, a lot of borrowing still takes place from private lenders, who charge exorbitant interest rates. Despite the high interest rates, borrowers are willing to pay the higher rates rather than go through the extremely cumbersome process of getting a loan from formal financial institutions, especially from banks, she said. She asserted that nowadays, other financial entities have made availing loans easier. However, these loans are limited as most of them can lend only to its members under the prevailing guidelines or rules. In this backdrop, it becomes relevant that the general public is given more awareness about the benefits of availing credit from formal financial institutions. Yet, these formal financial institutions and banks need to open up and cut the red tape.

 EDITORIAL

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fraudscammingscammerprivate investor

IFP Bureau

IFP Bureau

IMPHAL, Manipur

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