Need for rapid action against loan sharks

Over the years, the number of micro-credit lenders, approved or not, has multiplied in the countryside in the name of helping people in their fight against poverty. Their activities, especially the unauthorized ones, only made things worse for these people. Above all, taking advantage of lax government oversight of their activities, loan sharks often prey on victims of natural and man-made calamities. In this context, the High Court (HC) reportedly ordered the central bank on Tuesday April 12 to prepare a list of such unauthorized organizations and individuals engaged in moneylending in the country and submit it within the next two months. In addition, the Supreme Court ordered complaint boxes to be set up in every district and upazila for ordinary people to register their allegations against these unlicensed pawnbrokers.

Hopefully the central bank and other relevant authorities will expedite their efforts in response to the HC order to curb the said entities that illegally profit from the misery of the people. In fact, this isn’t the first time the nation’s highest court has acted on this issue. It should be recalled in this regard that on September 27 last year, the highest court ordered the Governor of Bangladesh Bank (BB) to form a special commission to investigate the activities of unauthorized financial entities. The HC rule also included the directive that these illegal entities should be clamped down on immediately, with full legal action taken against them with the support of the local government. According to a BB report drafted in accordance with the HC directive, the central bank wrote to the Deputy Commissioners (DCs) and Police Commissioners (SPs) of all districts to compile a list of such entities operating under their respective jurisdictions. As the said report progressed, the central bank said it would take swift action against financial entities liable to prosecution under the law.

However, some of these unregistered lenders were continuing their operations taking advantage of the lawsuits and writs they had filed with the court in the face of the BB action, the report added. Clearly, the central bank and other administrative bodies implicated by the HC rule are meeting resistance from these, albeit unaccredited, financial entities when implementing the court order. But whatever schemes they might apply to continue exploiting the impoverished part of the population, they cannot be allowed to continue their illegal activities indefinitely. In this context, traditional formal financial institutions such as banks have to come to the aid of the poor population who often fall into the lending traps set by these shrewd lenders.

In this regard, banks and other formal sector financial institutions will have to overcome their timidity in extending mortgage-free, low-interest credit to low-income and asset-poor people. Once this part of the population has easy access to the formal banking sector, these informal alternative sources of high-interest credit, authorized or not, will gradually withdraw from the scene. At the same time, dedicated counters can be set up in local administrative centers from which the victims of these illegal loan sharks can obtain compensation quickly. Hopefully the government would come up with quick measures to free the poor from the clutches of the country’s loan sharks.

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