Monthly Archives: March 2011

Karnataka lawmakers get car loans without submitting paperwork

Thirteen of 20 Karnataka lawmakers to whom the state government extended a car loan between 2008 and 2010 have not submitted the necessary loan documents to the government.

The Karnataka government provides an advance of Rs.500,000 to a lawmaker to buy a car at a simple interest rate of 7 percent per annum. To receive the loan, the lawmaker must first produce a bank statement showing that he or she is capable of repaying the loan. If the statement proves the lawmaker’s creditworthiness, he or she is granted the Rs.500,000.

Politicians have received loans for cars and computers without submitting the necessary paperwork.

Recipients of the loan are also required to submit details of the vehicle they purchased to prove that they actually used the money to buy a car. According to documents The SoftCopy obtained under the Right to Information Act, the members of the Legislative Council in question received the loan despite not producing bank statements for inspection.

If an MLC who has taken out the loan fails to submit the proof-of-vehicle purchase paperwork within two months of receiving the money, his or her salary is supposed to be withheld from the next payday, according to state government rules. However, no warnings have been given and no action has been taken in this regard.

Karnataka Legislative Council Secretary V. Shreesh refused to comment on the approval of such loans.

The MLCs that have not filed the paperwork for the car loan are Ashwathnarayana, P.V.Krishna Bhatta, Srikanth L. Gotnekar, Basavaraja Horatti, Mruthunjaya Jinaga, Basavaraj Hawgeppa Patil, Veerakumar Appaso Patil, Kota Srinivasa Poojary, B. Ramakrishna, Arun Shahapura, N. Shankrappa, Siddaraju and A.H.Shivayogi Swamy.

Lawmaker: I was busy

“I was busy all this while and will submit in a couple of weeks,” said MLC Basavaraj H. Patil.  “However, whether I submit or not, the government will deduct [the monthly repayment amount] from my salary.”

Asked how he used the Rs.500,000 and which car he bought with the cash, Basavara said: “Why is the media concentrating on such small things? Why don’t you look for some corruption cases?”

Some of the 13 MLCs in question claimed they had submitted the document.

“Though I have not submitted the document personally, it was sent through my personal assistant. Maybe the council hasn’t recorded it yet,” said P.V Krishna Bhat. “I have bought a Maruti Wagon R out of that fund.”

Similar case with computer loans

Similarly, 41 percent of the members of the Legislative Council have not filed the requisite paperwork for computer loans, according to the documents received under the RTI request. The government issues advances of Rs.50,000 for purchase of a computer. Between 2008 and 2010, 31 members availed themselves of a computer loan, but 13 have not submitted the necessary paperwork.

“I have submitted all necessary documents,” lawmaker Dodda Rangegowda said. “If you need, I can submit the bills.”

The MLCs that have not filed the documents for the computer loan are Doddarangegowda, E. Krishnappa, K.R.Mallikarjunappa, S.G. Medappa, Allammaprabhu Patel, B. Ramakrishna, Arun Shahapura, N. Shankarappa, A.V.Gayathri Shantegowda, Bharathi Shetty, R.K.Siddaramanna, Siddaraju and Maane Srinivasa.

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Posted by on March 13, 2011 in News and Views


Fraud haunts microfinance lending in Ramanagaram

 The recent regulatory changes for microfinance institutions are affecting the lending practices.

BANGALORE—Bogus registration of self-help groups (SHGs) and multiple borrowing from different microfinance institutions in Ramanagaram in southwest Bangalore is hurting small entrepreneurs dependent on microfinance loans.
An SHG is a group of micro entrepreneurs or workers, typically comprising 10-20 rural members , who voluntarily come together to regularly save small sums of money and mutually agree to contribute toward the loan taken collectively taken by them.

Recently, four men working for the Bangalore Rural and Ramanagaram District Cooperative Bank in Kanakapura were charged with abusing the microfinance scheme. They allegedly formed 32 fake SHGs and swindled a total of Rs.15.6 million.

“They’re still at large, though the High Court has rejected their bail plea,” said Ramakrishanan, manager of the district cooperative bank. A criminal case was registered in the City Crime Branch and is under investigation.

Default rate as high as 30%

According to the Association of Karnataka Microfinance Institutions, seven microfinance lenders serve 22,500 borrowers in Ramanagaram district and had a default rate as high as 30 percent in some of the microfinance institutions.

“Multiple borrowing [by SHGs] is one of the serious issues here.  Only a handful of individuals appear to have taken loans beyond their repayment capacity,” said M. S. Jayashankar, branch manager at the district cooperative bank. “But most of the SHGs repay loans on time as we charge an additional 2 percent for delayed payment.”

“Many of these groups borrow from banks once they have accumulated a base of their own capital. An established track record leaves them with an opportunity to take loans with ease,” Jayashankar added.

Yashoda. P., a customer at the bank who is also part of a 20-member SHG, has taken out micro loans three times with Canara Bank.

“Initially we took out a Rs.200,000 loan at a 3 percent interest rate and we divided the amount equally. Our group members consist of fruit sellers, tailors and garment factory workers—mainly manual laborers,” Yashoda said.

“We give loans at a 4 percent interest rate for SHGs, which have 10 to 20 members, and the procedures for allocating the loan are simple. It takes 15 days to process the loan,” Jayashankar said.

Microfinance lending big business in Karnataka

Customers rack up debts, while the funding institution makes big profits.

Karnataka is the second-largest state in terms of microfinance coverage, which includes the SHG and Grameen models. The microfinance lending business has drifted away from its original purpose of extending loans to very poor people, and microfinance lenders have moved toward profit making.
At a time when the microfinance industry as a whole is in the doldrums and under scrutiny for charging exorbitant rates of interest, SKS microfinance institution has recorded an over threefold jump in net profit for the first quarter of 2010, hauling in Rs.670 million. The company made a net profit of Rs.180 million in the same period a year ago.
Though Jayashankar says it takes just 15 day to process the loan, the misappropriation of funds and the recent introduction of regulations governing microfinance have made life tougher for borrowers.

“We’ve been waiting for almost two months now for our loan to be granted,” said Pavitra K. S., a customer at the Bangalore Rural and Ramanagaram District Cooperative Bank.  “Bank officials are scrutinizing the repayment capacity of our group, which is taking time.”

Villagers near Ramadevaraya Betta in Ramanagar are still unaware of microfinance schemes and are largely dependent on moneylenders during crises. Some villagers still lack access even to the banking service basics, such as a savings account.

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Posted by on March 13, 2011 in News and Views


Judiciary needs money to function smoothly

The  laws  remain the same, the victims’ fates remain the same, the culprits’ intentions remain the same, the politicians and government remain the same, just the amount of funds allotted for judicial reforms changes.

Balance the imbalance (Artwork by Prarthna Sarkar)

Union Law Minister M. Veerappa Moily recently said the Centre has initiated the process to bring judicial reforms for speedy disposal of cases and to ensure accountability for which a sum of Rs.200 billion has been allocated.

The project Access to Justice for Marginalized People (A2J Project) is being implemented in the seven focus states of Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan and Uttar Pradesh as well as at the national level with key institutions. This project has a joint fund allocation of 243 million from the U.N. Development Fund and the Indian government.
But isn’t the money allotted too huge? No, not at all, given the fact that we have to spend Rs.450 million on the security of Ajmal Kasab, a person who waged war against India, this seems to be a meager amount.

There are several others like Kasab in the country who need to be protected. In the midst of corruption and scams plaguing the country, the judiciary definitely needs reform to protect the lawbreakers.

Judicial reform is a subject of which much is talked about but little done. If the decision-making authorities take firm, independent and impartial decisions, the citizens would not normally be driven to litigation.

Though the much talked-about Food Security Bill and Lokpal Bill were missing from the agenda during this budget session, another 66 bills have yet to be discussed this session, which could burden the lawmakers as it adds up to the existing draft legislation.

Between 1999 and 2006 the overall pendency in cases has gone up by 33 percent. According to the Task Force on Judicial Impact Assessment report, it is well-known fact that as of today, there are more than 25 million cases pending in our subordinate courts and about 3.5 million cases pending in the high courts.

These cases are being administered by about 13,000 judicial officers in the trial courts, about 700 judges in the high courts and 26 judges in the Supreme Court. All this requires a good amount of money if we talk of bringing reforms to the judicial system.

The fact that we have around 13 judges per million population is lesser as compared to advanced democracies like Britain and the United States have around 100 to 150 judges per million.  The judicial system needs a total reengineering of its processes in order to harness the potential technology with productivity.

The public has a right to know what to expect from the court system. If there is delay in the disposal of cases, then they are entitled to know why.

Unfortunately, Mr. Moily, the author of epic poem “Sri Ramayana Mahanveshanam” does not realize that the Indian judiciary is going through an epic story in which people are losing faith in the system and the pivotal pillar of the state is not giving enough support to  discharge its function as per the Constitution.

The last resort for people is the court of law. If the judiciary fails, the Constitution fails and people would lose faith. Effective dispensation of cases required the judges to take effective and strong decision and implement the same to impose strength in the judiciary system.


Posted by on March 2, 2011 in News and Views

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