Mr. Sukhvinder Singh is a 34-year-old individual who is employed as a supervisor with a private company, Proactive Construction Pvt Ltd which is engaged in the construction industry. He resides in Patiala (Punjab) with his mother and two kids. His previous work profile expands across the retail sector and the BPO industry.
Sukhvinder was instructed by his present employer to open a new “Salary Account” in his name with the HDFC Bank, which is a normal process. In order to complete the process of account opening, Sukhvinder approached the HDFC Bank with his documents. To his surprise, the bank officials declined his request for a new account. The reason specified by the bank officials was that his PAN Card was already linked to an existing account with the bank. But to his horror, he was also informed that a loan has also been sanctioned against that account.
This revelation took Sukhvinder by surprise. In order to get a better understanding of the problem, he decided to check his credit report on the TransUnion CIBIL website. As this was the first time he was logging-on to the TransUnion CIBIL website, he started creating a new account. But when he tried creating a new account with his details, he was informed that there is already an existing account with his details. He tried logging-in to the account with the help of the security question. As luck was on his side, he was able to log-on to the account from where he got the details of the individual who had created this account in his name.
This is where the real twist came when to his utter surprise, the other person shared the same name, date of birth and PAN Card. This was when he realized that the Income Tax Authorities have mixed-up their details and in turn issued the same PAN to two individuals. He registered a complaint with the authorities, who confirmed the mix-up on their part due to the same name and date of birth. After laborious efforts and significant time, he was issued a NOC by the Income Tax authorities while a new PAN was issued for the other “Sukhvinder.”
Well, this was the easy part as his ordeal had just started. As a loan had already been issued against his PAN Card details (albeit for the other Sukhvinder), his credit score had taken a hit, which led to the rejection of his loan applications. Out of desperation and lack of financial knowledge, he resorted to using the new-age “Pay-day” loan apps and applied with 2-3 different lenders without giving much thought to the applicable charges and repayment conditions.
His total borrowings stood at Rs. 12,000 from multiple loan apps with a repayment tenor ranging between 10-20 days. When he started making the repayments, that is when the enormity of the situation became clear to him. With all the interest charges and processing fees included, he would be repaying Rs. 14,500 after the completion of the repayment tenor, varying between 10-20 days. This translated into an astronomical APR of 400% per annum. Such exorbitant interest charges push him towards a debt trap where he would borrow from one app to make repayments for the loan availed from another app, till the day he received his salary. On top of that, he was also bearing Rs. 590 for every EMI missed/bounced along with 2% penal interest. He was being crushed under the mountain of debt with no respite in sight.
How Entitled helped?
When we understood various problems being faced by Sukhvinder, our team created a financial empowerment plan for him. We understood that he needed help for clearing all his outstanding small payday loans and required a longer repayment tenor that is in sync with his financial situation.
In order to help him, we sanctioned a loan for Rs. 20,000 with a repayment tenor of 4 months and a total processing fee of Rs. 1,240/-, which is almost half of what he was paying to the “Loan Apps” on a monthly basis. Our team also created a customized repayment plan for him, which helped him save almost Rs. 3,000 per month from his repayment outflows, in turn, increased his effective monthly income by 15%, empowering him with enough financial strength to pay-off all his high-interest loans.
Our team helped Sukhvinder understand his financial situation properly and guided him towards the path of leading a “debt-free” life. We empowered him with financial knowledge and understanding that helped him make informed choices regarding his financial future. He is now leading an “Entitled” life and looking forward to investing his savings into rewarding investment avenues.
At Entitled Solutions, we are on a mission to work with private sector employers to empower their blue-collar workers with comprehensive wellness packages that take care of their financial as well as health-related requirements. Over the years, we have had the opportunity of collaborating with multiple enterprises and have made positive differences in the lives of blue-collared workers, leading them towards financial freedom.