New-age moneylenders

Over the last year or so, quite a few people who borrowed money from banks killed themselves. Reason: they missed an EMI or two and the collection agencies hounded them like crazy and humiliated them.

That made me think of the many calls we receive from banks, begging us to take loans. It doesn’t matter that you already have one and are on the verge of selling your furniture to pay back the loan. They’ll still try to shove another loan down your throat. I don’t understand how this works.

If 60-70% of a person’s income is already tied down in debt payments, on what basis do banks ask that person to take another loan? I know that loan begets loan if you have a good credit history. Am no finance guru, but isn’t it necessary, amidst all that hard selling, to think about the loan repayment capacity of the borrower?

I was wondering if this was happening only in India. But recently, I saw a documentary, The American Nightmare, with the same subject, that is, people falling for easy loans that quickly become traps. I think the documentary was set in Cleveland where houses in whole localities were boarded up and put up for auctions. Pretty scary.