Students Attracted by Easy Loans from Microcredit Websites | Hyderabad News
While staying in a youth hostel, he took out loans worth nearly Rs 80,000 from an online microcredit site using his friends’ IDs and then made failure to reimburse.
When his friends received notices of the company’s default, they started hunting down Varun. Unable to clear the fault and too scared to ask his parents for money, he chose to drop out of college.
Varun is one of the many students in Hyderabad who have flocked to microcredit sites to fund their gadgets or parties when parents refuse to loosen the strings on their purses. In the process, some of them find themselves in a debt trap as they barely come out of their teens.
“A friend told me about this easy way to get loans,” says Karthik P, a sophomore engineering student. According to him, it is a fashion among his peers to use the money to buy alcohol or to organize parties. “I visited the website he recommended to me and applied for a loan to buy a cell phone. A high school student approached me to find out if I was a student and once he saw my diplomas my loan was sanctioned.
The directors of the colleges say they have received several complaints from parents about their children who got into debt after having taken out these loans without their knowledge.
“Lately we have received many complaints from parents about these sites, which also contain applications,” says Gautam Rao, president of the Telangana Private Engineering Colleges Association. He adds, “It’s scary because it kind of messes up the students and causes mental tension. We are even planning to approach university officials and will make the decision whether or not to file a complaint with the police. ”
Supported by Rao, representatives of the faculties of pharmacy said that third and final year students mostly fell into this trap.
“From what I’ve seen, it’s the third and final year engineering and pharmacy students who most often opt for these loans. Parents and college administrators must be careful and educate on the subject so that they do not take out loans unnecessarily just because they are available, ”says K Ramadass, President of Vikas College of Pharmaceutical Sciences and President of Telangana Private Pharmacy Colleges Managements. Association.
Ramesh Loganathan, head of research and innovation at IIIT Hyderabad, says he strongly disapproves of such student loans.
“They don’t know what they’re getting into and giving them access to easy money is not a good idea. I don’t even know if it’s legal or not.
Corporate lawyer Hirendernath says this is more of an ethical issue than a legal one, as these micro-lenders lend to students who, unlike their Western counterparts, have no source of income or assets. “Students abroad are independent and even work to finance their studies, unlike Indian students who depend on their parents. They are only usurers (like those of the past) but in an adapted and booted avatar.