This practice is causing immense harm to the people who borrow money from them and needs to be stopped immediately
Shoukat Lohar
Personal borrowing and loan has been a common practice for centuries in this region, especially in the rural areas of Pakistan. The moneylending trade by the individuals is often the only source of finance for the people who do not have access to formal financial institutions.
However, this practice has become a menace in certain parts of the country, particularly in Sindh, where people are being exploited by moneylenders involved in usury who charge exorbitant interest rates.
While banks and other financial institutions also charge interest rates on loans, they have certain principles and regulations that they follow. They have to follow guidelines set by the central bank and are accountable to the regulatory authorities. However, loan sharks, who are often local businessmen or landlords, are not bound by any rules and regulations. They charge whatever interest rate they deem fit and often resort to illegal means to recover their money.
In rural areas, loaning to poor people has become a profitable business. Loan sharks lend money to people who are in dire need of cash and charge them huge interest rates, sometimes as high as 100% per annum. The borrowers are often unaware of the terms and conditions of the loan and end up losing everything they have, including their property, livestock, and even their dignity.
The nexus of feudalism and local businessmen to give money with high interest rates must be taken notice of, by the government. The government must take measures to halt this practice, especially in Sindh, where this practice is rampant.
The Supreme Court, instead of indulging in political matters, should take notice of this issue and take steps to curb this menace.
The people who borrow money on high-interest rates often find themselves in a vicious cycle of debt, unable to pay back the principal amount and the interest. Many people have committed suicide as they were unable to pay back the money they borrowed, and their debt kept mounting. It is a matter of grave concern that innocent girls and women are often given as collateral to the lenders if the borrower is unable to pay back the interest-loaded debts.
Many people have committed suicide as they were unable to pay back the money they borrowed, and their debt kept mounting
This illegal exercise should be stopped immediately. People are already crushed due to high inflation, and personal interest-loaded loans are making their lives miserable. The government needs to take steps to provide access to formal financial institutions to the people who need it the most, and also regulate the informal lending practices. There should be a limit on the interest rates that can be charged on personal loans, and the lenders should be made accountable for their actions.
One of the reasons why people resort to loan sharks is the lack of access to formal financial institutions. Banks and other financial institutions are reluctant to lend money to people who do not have any collateral or a credit history. This has created a vacuum that has been filled by loan sharks, who charge exorbitant interest rates and often resort to illegal means to recover their money.
To address this issue, the government needs to take measures to increase financial inclusion. The government should create an enabling environment for the growth of microfinance institutions that can provide loans to the people who need it the most. Microfinance institutions can play a vital role in providing access to finance to the unbanked population and can help alleviate poverty.
The government should also take steps to educate people about the dangers of borrowing money from loan sharks. They should be made aware of the terms and conditions of the loan, the interest rate that they will be charged, and the consequences of defaulting on the loan. The government can also create a helpline that people can call if they are being harassed by loan sharks.
Personal borrowing and loans have become a menace in certain parts of Pakistan, particularly in Sindh. Loan sharks charge exorbitant interest rates and often resort to illegal means to recover their money. This practice is causing immense harm to the people who borrow money from them and needs to be stopped immediately.
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Shoukat Lohar is Assistant professor in English at Mehran University of Engineering and Technology Jamshoro. He can be reached at Shoukat.ali@faculty.muet.edu.pk
