Tuesday, March 15, 2011

Recovery agents to help in dowry recovery

XYZ News Network, 31st December 2009.

At the age of 60 GS Kumar is a troubled man. He married off his son in a lavish wedding thinking the dowry he would bring would wipe out his financial woes. But to his utter dismay and anguish, he got only 75 percent of the dowry amount. Now Kumar is a broken man, he has to marry off his daughter and his married son is still struggling at the business he opened with the money he received as dowry. Kumar was planning to use part of his sons dowry to marry off his daughter.

But now a group of recover agents has come together to help people such as Kumar. These agents generally work for banks, recovering personal loans from small time business men by harassing their family members when the business men are at their shops or factories. They also recover defaulters cars when the car owner fails to make the monthly loan installment. These agents generally operate by retaining a sizeable percentage of the loan amount as their fee, thus making a huge profit.

Now, these recovery agents are offering their services to harried people like Kumar who is struggling to get his due dowry amount from his son’s in-laws. Though agents are not targeting the huge profits they earn by working with banks, they are looking at the sheer size of the marriage market. It is estimated that at least 2 million men get married in India ever year and almost 80 per cent of them take dowry. Often this dowry amount is paid in installments. Often in-laws resort to cruel mental and physical torture techniques to get the remaining amount. In-laws often extract extra cash by beating their daughter in laws. Even though dowry taking is banned by law, with deterrents such as imprisonment these cash transactions are rampant and add to the non taxable black money in India.

Recovery agents plan to cash on this market and estimate it to be a Rs 200 million market. Even though they are planning to charge less commission, the potential market is huge and offer opportunities for existing agents to open offices in all cities and towns of India.

PE firms like Royam Money is planning cash in on this trend and are planning to invest in this booming industry. Royam Money plans to acquire 20 % stake in Summan Recovery, a Mumbai based recovery firm with offices in 20 cities in India.