Abolish Loan-sharking

In William Shakespeare’s The Merchant of Venice, the notorious moneylender Shylock demands a pound of flesh from Antonio when he fails to pay a debt within the stipulated time frame. More than four hundred years since the English dramatist wrote the play, the situation in Nepal’s Tarai region appears quite similar. There are scores of moneylenders almost as cruel as Shylock engaged in loan-sharking or predatory lending for years at the cost of indigent citizens who have no choice but to accept their exacting terms. Hard-pressed to meet everyday domestic needs like organising social functions or going abroad in search of jobs, they take loans from the moneylenders, but the latter often forge the documents, increasing the amount of the loan, adding interest to the principal and coercing the people to forfeit their land and other collateral when the borrowers are unable to repay.

When such excesses came to light, victims across Madhes Province organised and launched protests demanding justice. The government was obliged to take measures to address their concerns, so it established a commission led by former judge Gauri Bahadur Karki in April 2023. The commission received 21,500 complaints, some of which it settled, while most cases are still pending in courts. In this backdrop, the victims came to the street once again; they launched the Justice March on July 9 from Dhanusha heading to the capital. When they reached Nijgadh in Bara, Home Minister Sudan Gurung arrived there on Tuesday to hold talks with them and address their demands. He convinced the protestors to halt the protest and send a delegation to Kathmandu for further negotiations and an agreement to ensure justice for them.

On Friday, the government and the delegation on behalf of the victims signed a nine-point agreement to resolve the illegal and inhuman practice that has been plaguing the poor people for an extended period. As per the agreement, the government will table a proposal in the upcoming Cabinet meeting declaring loan-sharking as an economic crime while the Home Ministry will draft a Predatory Lending Crime Control Bill in the next three months. Once the Cabinet approves the proposal, all forged deeds, fraudulent mortgage documents, property transfer deeds obtained by means of coercion, and cheques issued under duress will be automatically invalid. And the enactment of the proposed legislation will pave the way for the review of pending cases and investigations against offenders under anti-money laundering laws.

The new law will categorically criminalise 14 predatory lending practices, including inflating the principal amount in loan documents, capitalizing the interest into the principal, refusing to provide receipts to borrowers, charging excessive interest, forcing borrowers to sign blank cheques or documents and seizing the property illegally. Besides, it will establish a dedicated tribunal to expedite the hearing of unfair cases and guarantee the return of the victims’ property and appropriate compensation.

The victims came to the street from time to time, forcing the government to take remedial measures, ultimately forming an investigation commission, but the issue is yet to be fully resolved. This time around, the Rastriya Swatantra Party government led by Balendra Shah is explicitly committed to good governance and is serious about resolving the problems plaguing the deprived people. Let’s hope the loan shark victims won’t have to resort to protests once again demanding justice with the practice of predatory lending effectively brought to an and Shylock-like characters duly punished as per the law.