T strike hits daily finance business

Hyderabad, Oct 09 (INN): Thousands of small and medium traders in the twin cities of Hyderabad and Secunderabad are in serious trouble due to lack of daily finances in the market.

According to traders, cash has almost evaporated from the market since the Sakala Janula Samme or the general strike began on September 13. Due to steep fall in revenues, the traders are unable to return the loans that they have borrowed and following uncertainty, the private financiers have stopped giving fresh loans. The situation has become so worse that hundreds of traders had to shut their small businesses.

Hyderabad is a huge market for daily finance business with an estimated daily turnover of over Rs 100 Crore. Private financiers provide Rs One lakh to Rs 50 lakh to businessmen on daily finance basis at an interest rate of 20 to 30 per cent.

For instance, if a businessman takes Rs One lakh as loan, then he pays Rs 1,000 daily for 120 days. If he defaults for two days, then Rs 1,000 is imposed as fine. Similarly, for Rs 10 lakh, the financiers collect Rs 10,000 daily for 130 days.

However, unregistered financiers dominate almost 95 per cent of the market and they give small amounts ranging from Rs 100 to Rs 1000. If a vendor borrows Rs 100 in the morning, then he repays Rs 125 in the evening.

Similarly, for Rs 1,000, the borrowers repay Rs 1100. There are 1.5 lakh to 2 lakh private financiers across the twin cities who provides loans to small traders.

Since the general strike began, a majority of borrowers have defaulted in returning the loans that they took on daily basis. Although the financiers are unable to recover the loans, they started imposing huge fines on defaulters.

According to some traders, the fine amounts have surpassed the actual loan that they took from the financiers. Due to bad recovery, the financiers have now stopped giving fresh loans.

According to rough estimates, nearly Rs 200 crore got stuck in the market due to the Telangana strike. "The recovery has been very bad for the last six months and the Telangana strike has just worsened the situation," Banwarlal, a leading financier at Siddamber Bazar told INN. He said due to bad recovery, the financiers have stopped giving fresh loans.

The mid-sized businessmen too are affected due to the lack of finances. They include businessmen who deal with the textiles and other materials used in the weddings.

According to a trader in the Old City, due to the general strike there has been steep fall in the sales and transactions. Due to non-availability of finances, the businessmen are unable to purchase fresh stock for the marriage season in the Hindu community which began on Sunday.

However, the small vendors, especially who deal with vegetables, fruits and other essential commodities are still able to survive the crisis. "We are not making profits, but somehow we are repaying the daily finances and earning our livelihood," Mohammad Akbar, a fruit vendor said.

The traders say that the market conditions would improve only after the general strike ends and cash returns to the markets.