Loan sharks defy crackdown

[Admin]

 
Loan sharks defy crackdown
Underground debts pile up over start of school term
Published: 23/05/2011 at 12:00 AM
Bangkok Post: Newspaper section: News  

Loan sharks preying on low-income parents who borrowed from them to pay back-to-school expenses for their children are posing a headache for police.

Hundreds of parents nationwide are thought to have turned to underground lenders to cover their children's school expenses for the new term, which started last Wednesday.

Less than a week later, loan sharks are now busy collecting their debts.

Charging interest of up to 5% a month, loan sharks resort to threats, extortion, and physical assault to recoup their investments.

Pol Maj Gen Winai Thongsong, deputy commissioner of the Central Investigation Bureau and head of a newly established centre for cracking down on underground lenders, said the number of loan sharks is growing as they take advantage of the demand for their services.

The centre started blacklisting loan sharks from the beginning of the year.

It is also working on a database of loan shark activity.

Police can take action against loan sharks only when borrowers file a complaint.

Borrowers enter arrangements with lenders voluntarily, and police are reluctant to step in unless something goes wrong, such as when the borrower defaults or misses payments, and the lender starts resorting to threats or force to compel payment.

Pol Maj Gen Winai said police once regarded underground lending as a petty crime, but now take a more serious view of the activity, as the heavy debts which low-income people incur can ruin their lives.

The school reopening period was a busy time for loan sharks, he said. Demand for underground loans is also high over New Year and Songkran.

Police are keeping an eye on the better-known ones. No figures are available on how many arrests have been made.

Pol Maj Gen Winai said most loan sharks are highly organised, influential people who include politicians and state officials.

Lenders often work in teams that include brokers, money collectors and thugs. The brokers usually travel on motorcycles in search of customers at markets.

Thugs extort money from borrowers and assault those who cannot repay their debts.

"Thugs and gunmen disappear from some areas, only to re-emerge working for loan sharks because the money is so good," Pol Maj Gen Winai said.

Chanthaburi is among provinces where loan sharks are most active.

One major lender is known to have more than one billion baht in capital to run his business, and 100 staff. Most thugs in Chanthaburi work for him, said Pol Maj Gen Winai.

Almost 6,000 people are thought to work in the illegal lending business. Of them, 2,795 are lenders and the rest, money collectors and thugs.

Bangkok has the highest number of loan sharks (899) followed by Uthai Thani (578), Chai Nat (204), Chanthaburi (202) and Nakhon Ratchasima (197).

As many as 1.18 million people nationwide have borrowed from loan sharks over the past few years, with Bangkok having the largest number of debtors, followed by Surin, Buri Ram, Nakhon Ratchasima, and Si Sa Ket provinces.

The government has helped settle the loan-shark debts of 440,000 people through refinancing schemes with state banks.

Thanai Aphichatseni, deputy chief of the centre which cracks down on underground lending, said police should do more to crack down on loan sharks.

"If the police do nothing, the number of illegal money lenders will grow quickly," he said.

In November last year, Prime Minister Abhisit Vejjajiva said illegal money-lending posed an obstacle to the government's plan to bolster the economy.

"Illegal money lending is not just a personal or a family problem," he said.

"It is also related to national security, law and order, law enforcement, underground influence, violence and crime."

The government launched a scheme to free the poor from the clutches of loan sharks.

Under the scheme, about 1 million households were to be offered soft loans with a limit of 200,000 baht each to pay off loan sharks.

Six government banks joined the scheme, offering an annual interest rate of 12% in the first three years.

The Government Savings Bank, however, would offer a special rate of 0.75% per month, or 9% per year, for the duration of the scheme.

Under the law, lenders can charge no more than 15% a year.

[Prakhonchai Nick]

Charging interest of up to 5% a month, loan sharks resort to threats, extortion, and physical assault to recoup their investments.

I would suggest that most sharks start at 5% interest a month, with most 10% or even 20%

There used to be an Indian who lent money out to the traders on Jomtien beach, who charged 20% a day!

[Dave the Dude]

Bet he wore a nice suit!

[AML]

And he was not wearing sandals and a turban on his head

[swimming pizza]

Bet he wore a nice suit!

A suit mister?

[Prakhonchai Nick]

It was 15 years ago and as I recall he had neither a turban nor a suit.

He ran a hardware shop in Naklua, and told me that he had to charge such high rates, because so many of the Jomtien traders never made any money and just disappeared overnight.

[AML]

I would disappear if i borrowed money at that price too.

[Admin]

It was 15 years ago and as I recall he had neither a turban nor a suit.

He ran a hardware shop in Naklua, and told me that he had to charge such high rates, because so many of the Jomtien traders never made any money and just disappeared overnight.

If he can't take the risk don't do the business.
The rates I hear here in Buriram are absolutely outrageous!
I really don't understand how the locals agree for such high rates of interest just to buy a new motorbike or showoff with some new furniture for the house.
OK, I can understand they have some needs but not at this rates.

Classic example:
Borrow money for the DOWN PAYMENT for a new car.
So paying 2 times interest and naturally a lot of money because they just bought new car!
Irresponsible decision in my opinion but I see it too many times so it seems usual here.