Loan Shark

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Access to credit is a major issue for low income families. Those with a stable and fixed income have little problem in securing credit especially in difficult times. However, ordinary people especially those in micro and informal business have much difficulty in convincing the bank or financial institution to borrow funds. Noting this gap, illegal operators on motorcycles offer people ready cash in the time of their need. In desperation the poor and low income families secure these loans which often turn into a night mare or even trade death. Often the borrowers do not realize the very high interest rates charged. The Malaysian Crime Prevention Foundation (MCPF) hosted a brain storming session on the issue of loan sharks and what needs to be done in addressing this problem. About 13 people gathered on July 12, 2006 at the MCPF Conference room. Datuk Dr Denison Jayasooria chaired the meeting. Tun Hanif Omar the former Inspector General of Police was present and he provided valuable intervention strategies on the theme and more specifically what can be done at the police level. Firstly, the representatives from the Ministry of Housing and Local Government explained the procedures relating to licensing of money lenders and the Ministry’s role in enforcement. There are two units at the Ministry, one that reviews all applications for licenses and the second on enforcement. On enforcement there are 23 officers and they are supported by a special unit of Police officers who have been seconded to the Ministry. Secondly, the discussion focused with regards to the difference between money leaders who are legal under the Money Lenders Acts and loan sharks who are illegal and therefore deemed as an illegal activity. A major area of concern was the interest rates and the methods employed to re At the root of the problem is the inability of ordinary people to urgently access loans when it is required. Loan sharks provide this service. Commercial banks and even licensed money...
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