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Multi-pronged strategy needed to fight loan sharks
The Saigon Times Daily
Sunday,  Nov 4, 2018,10:47 (GMT+7)

Multi-pronged strategy needed to fight loan sharks

The Saigon Times Daily

Data given at a press briefing last Thursday paints a worrying picture about HCMC’s social safety when it was revealed that the municipal police department has come up with a list of 600 unlicensed moneylenders, often referred to as loan sharks, and are mulling a strategy to cope with them. Just imagine each of the loan sharks has scores of borrowers, then tens of thousands of people in the city have fallen victim to those rings that make huge, illegal gains by slapping sky-high interest rates on loans, in many cases as high as hundreds of percent a year.

There have been stories of borrowers having to transfer their houses or other properties to such lenders after taking out small loans that multiplied after certain periods; there have been cases of insolvent borrowers being arrested or physically harmed by thugs employed by illegal lenders; and there have been numerous cases of harassment by such loans sharks under various forms, from splashing paint and other dirty substances onto the borrower’s house to death threats. Little has been done to safeguard the victims.

In HCMC – though such rings are not limited to HCMC alone – illegal operations by loan sharks are diverse in form. One can see leaflets handed out on the street, and small ads posted on the internet or electricity poles or any street corner. Loan sharks are also disguised under legal entities like pawn shops or debt recovering companies; and conditions are extremely simple and easy-going, as borrowers do not have to prove anything but simply hand over identity cards or household registration books.

Until now, police have repeatedly asked the people to shy away from loan sharks. Such warnings have not paid off, as evidenced by the booming number of unlicensed money lenders mentioned above, though this number may be just the tip of an iceberg.

In fact, loan sharks find favorable conditions as fertile soil for their business.

First, many poor people cannot access credit at banks or finance companies due to stringent lending conditions, and when faced with financial hardships, they tend to choose unlicensed moneylenders instead. Second, regulations as well as their enforcement to ward off financial crimes, especially for petty loans, are not strict enough to deter shark loans, manifested by the number of court cases so few and far between against loan sharks. And last but not least, many people as borrowers are not well aware of the law, do not understand that under the Civil Code, such loan sharks are violating the law, and it is borrowers in such cases that are protected, not lenders.

It is expected that HCMC Police will take an iron fist in dealing with loan sharks, but such measures alone are not enough. Apart from new regulations to cast as outlaws all loan sharks, a new task-force agency should be set up to handle complaints from victims and to come to their protection. And most importantly, the State should have new policies to make micro credits easily available for the poor. Otherwise, the situation will go from bad to worse.

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