The so-called investors of un-regulated private banks or financial institutions in Manipur are up in arms everywhere. These ‘investors’ are knocking at the doors of every such institution for refund of their savings which they pledged on the promise of high interest rates like 3 pc per month which comes to 36 pc in a year.
There were so many ‘investors’ from those with chunks of retirement benefits and not so legitimate persons with black money. It might not be that much of a problem for those who were out to turn black money into white. But it is a 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.
When the dam burst open, these small-time investors were painted as gullible people and the state simply refused to come to their aid. Are they all gullible people? It might be true for some of them, but it should not be generalised. Instead, one should also try looking from the other way round.
Many of them are indeed victims of the prevailing conditions of the economy where the gap between the poor and rich are ever widening and the level of corruption in the society besides the low lending rates of the formal banks along with their frustrating multi-layered terms and conditions.
The so-called investors had a rude awakening when Narengbam Samarjit of Salai Holdings announced the formation of a Manipur ‘government in exile' in October 2019. Samarjit was the chief of Salai Holdings, a parent company of several companies, including Smart companies.
N Samarjit was subsequently disowned by his own brother and directors of the company. However, the company offices were raided and sealed by state police and subsequently by the National Investigative Agency (NIA) while the accounts of the companies were freezed. Then, the agonies of the investors followed.
It is not only Salai Holdings, but there are several other private banks and unregulated financial institutions operating in the state. One such financial institution in the news currently is Lamjingba group of companies which also owns a news network and a private hospital. After months of knocking at the offices of the Lamjingba group they at last zeroed in on the Chairman and Managing Director Sanasam Jacky who was once touted as an enterprising young man with brilliant business acumen. Somehow, he was convinced to handover the companies, factories and assets of the group to the investors association.
However, the worth of these assets would not be enough to pay off the deposits of investors alone, not to talk of interests as the investors say. There are reports of some other private financial institutions refusing to refund even the deposited amounts while some top people who once roamed in fancy cars had gone into hiding.
Now comes the question on why the 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 for 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 funds and tax evasion. The state government also agrees that 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. In such a backdrop, banking reforms and more awareness drives about the benefits of availing credit from formal financial institutions among the general population has become necessary. And so also, there is a need for a regulatory mechanism for the so-called private banks and financial institutions.