Poor and damnedState must act to extricate the poor from the teeth of loan sharks.
It has been over a week since people haunted by loan sharks came to Kathmandu seeking justice. Some are farmers, while others are business owners and parents who sent their children abroad for better educational and employment opportunities. Their background and location might be different, but their problem is real: They needed loans, but seeking a quick and easy option, they turned to loan sharks. The lenders, in turn, made the lives of their loanees a living hell by multiplying the loan amount with exorbitant interest rates. The victims say that no matter how much they continue to pay, the loan does not seem to get over. The victims went to their ward offices, municipal offices or police stations, but to no avail. They have now assembled at Maitighar Mandala, the centre of hope for people from all across the country to amplify their voices when all their pleas have fallen on deaf ears.
Loan sharks are a growing menace, which only exposes the weak credit facility in our banking system. They operate without any sense of accountability. They disperse loans but threaten the poor with dire consequences or hold their property hostage to get their money back, taking advantage of the loanee's dire situation. The loan sharks are exploiting a legal loophole as there is no clarity under whose jurisdiction it would fall should someone have a complaint against them. When borrowers fail to pay the loan on time, the lenders impose stringent conditions on them, leading to their victimisation. There are already several cases of people becoming homeless, leaving the country, or committing suicide.
The problem has already inflicted our society, and the government must take serious stock of the situation. The lack of easy access to loans pushes people to seek lending from informal, non-institutional channels. The banks must follow their due diligence and vet every application before disbursing loans. The government must step in to facilitate the reworking of lending policies to become more people-oriented. Despite the mushrooming of micro finance institutions all over the country, marginalised communities continue to get the short end of the stick.
The government must be proactive in bringing these communities within the jurisdiction of the standardised financing system so that they do not go to the loan sharks' doors at the slightest financial inconvenience. Often, banks take time in disbursing loans, the documentation system is complicated, and they ask for an excessive amount of surety. Despite going through much hassle, the amount of loan provided is comparatively lower. Perhaps such a predicament forces people to opt for loan sharks, who give loans readily, although it is illegal.
This is a complex problem with no silver bullets, but the first step for the government is to recognise the issues loan sharks are creating and not overlook their atrocities. The vulnerability of the poor is the primary concern. Any attempt to lift them out of the vicious circle of loan sharks is to lift them out of poverty and provide them with a social safety net. For this, the government should improve the foundations of social security, including medical care. Furthermore, it should actively discourage extravagance in the name of marriage that pushes families to poverty. It is only by solving the ills of society that we can lift the people from the vicious cycle of poverty and financial exploitation.