Beware of black market loans, say experts in Oman

Energy Monday 23/July/2018 21:35 PM
By: Times News Service
Beware of  black market loans, say experts in Oman

Muscat: Experts are calling on citizens and expatriates to be wary of borrowing money from unofficial sources.
“Many financial institutions in the Gulf are facing situations of unpaid loans from expatriates and locals as many have either lost their jobs, experienced salary delays, or received no salaries at all, due to the economic situation,” Financial Crime Analyst Jose Chacko told the Times of Oman.“Most of these workers seek assistance to meet various expenses and family commitments.”
“Delays in salaries and in-contract settlements mean many people seek the help of illegal money lenders to meet commitments,” said Chacko.
“Most of the illegal money lenders charge exorbitant interest rates, which are normally higher than the loan amount. Lenders normally give loans and use passports, ATM cards, and blank cheques, among others, as security. Normally the interest rates go up to 120 to 130 per cent per annum.”
“Once you’re in, you are in a debt trap,” he added.
“Unlike in western countries, there are no debt counsellors here, so it is better to avoid borrowing from illegal money lenders.
“There should be provisions for regulated loans to the needy without a lot of hassles and formalities.
“It is our social responsibility not to throw these needy people into the hands of the unscrupulous,” said Chacko.
Members of the business community also expressed their concern.
“Due to the recent difficulties in the economy, there are some who have fallen prey to the idea of getting easy loans from unauthorised sources,” said Lateef Shahdad, General Manager of Mass International.
“As many have failed to meet their financial obligations, they then turn to alternative sources that offer a seemingly easy way out.
“But the repercussions of these loans are great and damaging,” added Shahdad. “Many people who have fallen into this trap end up losing a lot of money and incur great losses due to exorbitant rates charged by these illegal lenders.
“While people end up regretting this mistake, many are reluctant to come forward due to the illegal activity they were engaged in, making it difficult to find them and get justice for them.
“For that reason, people should refrain from obtaining loans from unauthorised and illegal sources and raise awareness about the dangers of doing so to save others from falling prey to this trap,” he remarked.
“Additionally, they should do all they can to meet the threshold required to get loans through legal and appropriate channels.”
The case of one Bangladeshi worker highlights the dangers of resorting to loans outside the legal banking system.
Mohammed, a cleaner working in Azaiba, said he was forced to borrow from illegal money lenders because his son back home had fallen sick. I don’t earn a lot of money, so the banks were not willing to give me such a big amount,” he admitted.
“We live from hand to mouth here and most of the money we earn goes to our families. Waiting for a loan from the bank takes a long time and most of us don’t even know if we will get it,” Mohammed said.
“My son was very sick and I urgently needed to send money home. I couldn’t afford to wait for two weeks for the banks to give me money, and even then, nothing was guaranteed,” he added.
“What else could I do? My wife would call me two or three times every day, sometimes from my son’s bedside, saying she didn’t have money to pay the hospital bills and medicines. I was desperate,” he added.
“Normally, some of the people in the company I work for will give me some money out of kindness, but I cannot keep asking them.”
“In the end, I had to borrow around OMR200 and pay OMR80 as interest,” he recalled
“That is a very high amount and I am still paying back the interest on the loan.”
His views were echoed by an Indian maid working in Ruwi.
“My sister and I live here alone, and we have to provide for so many people back home, including our parents, our brothers and sisters, and our children,” she revealed.
“We don’t want them to end up like us, so a lot of the money we earn goes towards their education and to support our parents because they are elderly.
“But the money we earn is seasonal, because there are times when we don’t have enough homes to clean,” she added.
“We try to live here on the bare minimum, but sometimes our children need books for their education or my parents need money for medication, so what can we do then? Can we deny them these things?
“I had no option but to approach a lender for money,” she said.“In the beginning, he was asking me to pay OMR75 for a loan of OMR150, but I was later able to convince him to bring that down to OMR50.
To many people, this might seem like a small amount, but we are poor people and we struggle to make a living.”