The law criminalising the practice of loan sharking has emerged as an important weapon for the victims as they have already registered over 50 cases against alleged loan sharks.

According to the inquiry commission formed to resolve the problems caused by usurious lending, victims have registered as many as 55 cases against alleged loan sharks till last week.

On July 28, the practice of loan sharking was criminalised by amending the National Criminal Procedure (Code) Act-2017.

Victims have registered as many as 13 cases in Saptari, the highest registered in a district so far, according to the commission. Nine cases have been registered in Bara, eight each in Dhanusa and Rautahat, seven each in Siraha and Mahottari, and three in Sarlahi.

“The victims filed the cases as the alleged loan sharks were not ready to settle in a compromise deal. In many cases, alleged loan sharks had prepared the documents stating that the borrowers had taken more loans than they had actually received,” said Gauri Bahadur Karki, chairperson of the commission.

On September 3, a case was filed against Sujata Sah, an alleged loan shark of Siraha, at Siraha District Court. “The court has remanded her in custody,” said Karki. Sah has nine borrowers who claim to be victims of loan sharking, the commission said.

Chairperson Karki said that cases were filed against alleged loan sharks who threatened the victims instead of settling for a deal.

As per the new legal provisions, loan sharking means making victims sign a promissory note without any money being lent, mentioning higher amounts in the documents than what were actually lent, and preparing a promissory note by adding the interest to the principal amount before lending.

Other punishable offences are not providing receipts for the amounts paid by the borrowers, threatening and exploiting loanees, and unlawfully seizing their properties.

The new law which was brought into force in July criminalises the practice of lending money for interest through unfair transactions.

Under this law, offenders are subject to jail terms of up to seven years along with fines as high as Rs70,000 for loan sharks.

As per law, if a loan shark had confiscated cash or property of the borrower, an equivalent sum or property should be returned to the borrower. “If it is proved that the ownership of fixed assets of the borrower has been transferred in the name of a person nominated by the loan shark, such transfer becomes null and void,” the law states.

According to Karki, the law has helped many alleged loan sharks to compromise with the victims and resolve their issues.

According to the commission, till September 15, it could help settle disputes related to 4,063 complaints.

Even though the lenders had claimed to have lent as much as Rs7.44 billion to the borrowers, they agreed to settle their dispute over loans at just Rs1.33 billion, according to the commission. The lenders also agreed to return 173 bighas of land taken as loans to the borrowers.

According to the commission, it had received over 26,000 complaints from 67 districts. As many as 18,819 complaints were received from eight districts of Madhesh Province alone with Bara topping with 3,353.