Break the cycleMost loan shark victims will continue to be denied justice unless the local bodies become more active.
Long marches of loan shark victims to Kathmandu, the federal capital, from every part of the country, seems to be a never-ending saga. Reportedly, this time, people from the eastern districts, including Sunsari, Morang, Dhanusha and Rautahat, have already begun their journey to the capital from the Kakarvitta border in the Jhapa district. This march, as has always been the case, is aimed at amplifying voices for justice against usury—the practice of lending money at exorbitant interest rates.
This was bound to happen as the government commission formed in April 2023 to investigate the matter has thus far resolved only 5,188 of 27,582 usury-related complaints through compromise and mediation as of December the same year. The government criminalised loan sharking on July 28 last year by amending the National Criminal Procedure (Code) Act 2017; however, the law is sparsely applied, and resolved cases are a drop in the bucket. As Awadesh Kushwaha, chair of the new march to Kathmandu said, it is about time the victims got justice.
Moneylenders, microfinances and loan sharks entice poor and vulnerable people who are desperate for just about any help—so that they can look after their families, educate their children or to go abroad for work. These people, who have little or no financial literacy and nothing in collateral, end up drowning in debt. In many cases, the loan sharks forge fake documents to inflate the amount of borrowing. Their actions extend to bribing courts and obtaining fingerprints from official documents as per reports. These activities, as per the law, are all grave crimes. Loan sharks who engage in such activities are subject to seven years of prison and up to Rs70,000 in fines.
When the government criminalised usury last July after a huge outcry and series of demonstrations, it brought hope to loan shark victims. The law’s implementation, however, has fallen short, often with far-reaching consequences, forcing many victims to end their own lives. Most victims will continue to be denied justice unless the local bodies become more active. The local units should, as far as possible, be able to investigate and resolve all usury-related cases under their jurisdictions. It is also up to them to spread financial awareness to potential victims so that they don’t fall prey to loan sharks. Moreover, local authorities can also play a big role in monitoring (and punishing) unethical activities of money lenders. It is in turn up to the federal government to adequately equip and empower the local units to be able to carry out these additional duties.
The long-term goal has to be to financially cushion the poor. For this, it is essential to ease the loan-taking process in micro finances and banks so that the borrowers don’t even consider turning to loan sharks. There can also be added incentives for those who want to start micro-enterprises, be it in the field of farming, pottery, poultry, or pickle making. Attractive loan schemes to startups and micro enterprises would be another big help.
The new march of loan shark victims is definitely not good news. It suggests that the Nepali state does a poor job of helping people who most need such state help. This clearly is not the ‘socialism-oriented’ country the new constitution envisions.