KATHMANDU, May 6: The government has formed a new law which has provision to slap a jail term up to seven years and a cash penalty of Rs 70,000 to those found guilty in cases of loan sharking.
Publishing the provisions in the Nepal Gazette on Wednesday, the government has enforced the new law to check the growing financial anomalies that have victimized a large number of people. The government through the ordinance from the President has come up with the provisions terming the illegal financial transactions an offensive act.
The new law has mentioned if the creditors are found to have confiscated any fixed or movable assets of the debtors, in the name of exorbitant amount of dues, then the borrowers will be provided with the equivalent amount from the offenders. Likewise, both the borrower and lender will have to maintain each of their witnesses as signatories while they prepare a document of the financial transaction.
Police use batons and water cannons on loan sharking victims
The cases of loan sharking came to the limelight a few months ago after a large number of the victims came up with complaints against those who have been exploiting them for a long time. Currently, hundreds of victims mainly from the Terai districts have been staging sit-ins at the capital demanding to check the malpractices.
The victims of loan sharks are often from vulnerable and marginalized communities who cannot access formal financial institutions due to lack of collateral or credit history. They are forced to take loans from informal sources at exorbitant interest rates, which they are unable to repay.
Loan sharks have been found using threats, intimidation, and violence to recover their money, which often results in a vicious cycle of debt and poverty for the victims. Many of them have also been suspected of enjoying protections of political parties to continue with enforcing their misdeeds over the poor people.
For over a month, the usury victims from different districts of the country have been in protests at the Shanti Batika in Kathmandu. The first group of loan shark victims came to Kathmandu on March 27 on foot from Bardibas in Mahottari while the second group joined the protest on April 3.
After the government came under pressure from various fronts including the lawmakers and the National Human Rights Commission (NHRC), it formed a high-level commission with the aim to resolve the issues of the usury victims. The commission led by former judge Gauri Bahadur Karki includes former Additional Inspector General of Nepal Police Uttam Raj Subedi and former Deputy Attorney General Ganesh Babu Aryal as its members.
Meanwhile, the loan sharking victims said they will continue their protest until their demands are fulfilled completely.
Talking to the media, a loan sharking victim said, they have been seeking the government intervention to cancel Dristibandhak Tamsuk (an informal legal document used by loan sharking agents to exploit poor and illiterate people), return the money overcharged by the loan sharks and take action against them and investigate the illegally seized assets by the loan sharks.
The victims also demanded that the check bounce cases be declared illegal. They urged the government to release the victims, who were arrested during the protests, with dignity.
