Employees of the beleaguered Satyam Computer Services [Get Quote] are now finding it difficult to get personal loans or pay back equated monthly instalments. Even their credit card limits have been reduced by almost 80 per cent since banks have become stringent following reports of the severe cash crunch at Satyam on the back of the admission of a financial fraud by the former company chairman Ramalinga Raju.
Ajit (name changed on request), working at the company's Hyderabad office, wanted to shift his loan from a private bank to Canara Bank [Get Quote] to reduce his monthly EMI burden. The public sector bank first agreed to swap the loan but later went back on its word. Several calls to the bank got the same answer: "We have put it on hold". With the construction of his house half-way through, Ajit now finds himself at the crossroads. "We will not get any loan as long as we are with Satyam," he rues.
Another software engineer, Jatin, who recently took a home loan and is paying Rs 32,000 as monthly installment said he now wants a new job or selloff the flat. "Even my project manager has asked me to switch over. Otherwise, I might be forced to sell off my flat. How will I pay such a huge installment if I lose my job?" he wonders.
M Harsh Vardhan, director, State Bank of [Get Quote] Hyderabad, admitted the crisis at Satyam will make recoveries difficult for the bank from the existing loan holders. "Loans are given based on the repayment capacities of the employees. But clouds of uncertainty loom on the job security of the employees," he says, explaining why the bank was taking its time to decide on the applications of IT professionals. Satyam employees are not alone, he points out.
A private bank executive, who did not want to be identified, informed that a meeting was convened by his bank recently to discuss the loan scenario in the wake of Satyam developments. "There is no resolution yet but I can only say the loan processing for all would be more stringent henceforth."
According to one employee, "I was informed by an email from my bank that my credit card limit has been lowered by 70 per cent."
Talks about Satyam skipping the salary have only got employees more worried. "I have got calls from two companies. I will take a decision on which one to join this week," says Rishi (name changed), another employee. He decided to quit Satyam earlier after learning about the resignations of independent directors from the board. "I would not be able to pay the EMI if I lose my job. It will mount to Rs 100,000 if I don't make the payments for two months. I will be a defaulter then," he says.
Rishi also helped his colleague in buying a house in his locality. For this, his colleague raised Rs 20 lakh (Rs 2 million) as part payment and promised to pay the remaining after encashing his employee stock options. By working at onsite locations, he garnered about 15,000 shares. But the free fall of the company's share price has rendered him incapable of fulfilling his payment obligation.
Property management and service apartments firm Corporate Inn enjoyed a good patronage from the employees till recently. "There is less recruitment at Satyam now so there are not many takers for service apartments," says Vishwanath, managing director of Corporate Inn.
Spouses working in Satyam who have families to support are feeling defenceless in these troubled times. A couple, both working in Satyam's Hyderabad centre, said, "We are hoping at least one of us gets another job before it's too late to find one."
(With inputs from Kaustubh Kulkarni & Priyanka Joshi)
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