The rates of interest charged are very high, estimated to be from 120 per cent to 200 per cent. Against the loan given, promissory notes and blank cheques are taken.
A massive blackmail, extortion and sex racket linked to "call money" has been exposed in Andhra Pradesh, in which 80 people from different political parties have been arrested.
The police say the scandal operated in multiple districts and involved politicians, businessmen and so-called moneylenders. The Andhra Pradesh government has ordered a judicial probe into what has been dubbed the "call money racket."
Call money is a loan that is literally a phone call away, with money delivered at one's doorstep. The flipside is that the lender can demand it back at any time and if the borrower cannot repay, the lender can take away property.
The police say that in this racket, women were coerced into sexual exploitation.
"Women who are doing small businesses and borrow money to make ends meet, when they can't repay, they are exploited," said a woman.
The lenders demanded rates of interest that were as high as 120 per cent to 200 per cent. Promissory notes and blank cheques were taken against the loans.
The case surfaced after a woman in Vijayawada complained to the police that she was forced to give back Rs. 6 lakh when she borrowed only Rs. 1.5 lakh.
When they started investigating, the police uncovered the web of threats, coercion, extortion, sexual exploitation and even prostitution riding on the money-lending business.
Kanakaraju, who runs a small eatery, says he borrowed Rs. 50,000 and had been paying Rs. 500 every day for the past five years. Yet the lender has not returned his documents and promissory note. "They made my life hell," he said.
"The names of several ruling party lawmakers, ministers and other influential Telugu Desam Party leaders have come up in this shameful scam. Yet the chief minister has not taken any action," alleged YSR Congress president Jaganmohan Reddy, who took the case to the governor.
Andhra Pradesh Director General of Police JV Ramudu said there was no question of sparing anyone, irrespective of political affiliation.
Top sources told NDTV that an accused in East Godavari district, Nallmella Veera Venkata Sairam Reddy, has close links with the YSR Congress. The police recovered 500 promissory notes from him.
Chief Minister Chandrababu Naidu has said tough action will be taken against those involved and has asked district police to invoke Nirbhaya Act in case there is an instance of sexual exploitation.