Those loan deeds that cannot be settled through conciliation will have to go thru legal process
KATHMANDU, JULY 16
The commission formed to probe the woes of usury victims under former judge Gauri Bahadur Karki also known as anti-usury commission settled 1,882 complaints through mediation/conciliation out of 24,000 complaints.
The commission issued a press release saying it helped return 41 bigha, eight kattha and 11 dhur land to borrowers from their lenders. Lenders who had secured loan deeds from borrowers, gave up their claim to Rs 1,145,400,000. This shows how appalling the problem of usury is, said the commission.
The combined real value of the loan deeds that were settled through mediation/conciliation was almost of Rs 900 million. Lenders had sought to recoup Rs 1.71 billion from borrowers. Loan deeds of rupees 560.74 million were settled with the consent of both sides.
The commission is processing complaints and once this process is over, it will prepare the details of loans, property given as collateral and transfer of land ownership to lenders for the disbursed loan. Thecommission said people below the poverty line were compelled to take loans from local lenders for social and cultural events such as wedding, pre-wedding ceremony (Tilak), thread ceremony, medical treatment and foreign employment.
As banks and financial institutions often deny loans to these categories of people, they are compelled to resort to local lenders.
Often the local lenders make loan deed amounting to three times the loan amount. Lenders take blank cheques from borrowers and later file FIR against borrowers under banking offence law for bounced cheques.
The anti-usury ordinance came into force on May 3, but that law cannot have retroactive effect for usury that took place before May 3.
Commission Chair Gauri Bahadur Karki told THT that the commission was trying to solve the problems of usury victims through mediation/ conciliation as that would create win-win situation and promote cordiality in society. He said the commission was trying to strike a balance by discouraging people who took loans from local lenders on genuine terms but were nowlodging complaints with the motive of seeking undue advantage; and at the same time trying to resolve those cases where lenders took undue advantage of people below the poverty line.
Karki said there was at least one complaint in which the complainant sought return of land which was transferred to a lender 51 years ago. "A land property might have been sold for Rs 3,000 or 4,000 51 years ago whose market value might have reached 30 or 40 million today. Looking into such a deal is not possible," Karki added.
He said the commission cannot help those people who were not poor, but took loan for investing in real estate, or who took loan to indulge in gambling.
Karki said the commission was making satisfactory progress.
Just today, 23 complaints were settled through mediation/conciliation in Sarlahi district alone.
The commission reached the family of Shyam Pardeshi who is in jail on the charge of usury. Pardeshi agreed to waive the loan of 36 borrowers out of 96 people who had borrowed money from him.
The Karki-led commissionhas been telling lenders that if they do not come for dialogue to solve problems and if it is found that they disbursed loan at a much higher rate, then they could be prosecuted under anti-money laundering laws.
Karki said his commission was promoting mediated settlement, but, in some cases, borrowers, who had taken loan under genuine conditions, were not coming to talk to them.
Karki said usury became a serious problem as banking institution did not provide loan to people bellow the poverty line and lenders enjoyed political patronage.
"It is not hard to determine the nexus between political leaders and loan sharks," he added.
According to Karki, banks and financial institutions' preference to disburse loan to the rich and wealthy and refusal to disburse small loans such as Rs 100,000 to small borrowers was one main reason why poor people fell into the trap of loan sharks.
Poor people are made to visit government hospitals to get insured treatment. If provisions are eased allowing poor people to get treatment from any nearby hospital, many would not feel pressure to seek loans from local lenders.
Karki said that although it is said people could go to foreign countries to work without paying anything, in practice, one job seeker was paying between Rs 300,000 to 400,000, and this situation should end. He said social practices (Reform) Act also needed to be strictly enforced to save people from loan sharks.
Karki said the anti-usury commission was likely to recommend that the government have in place an anti-usury mechanism in all district administration offices for two years. This would bring both lenders and borrowers to the negotiating table and seek to resolve the issues through mediation and conciliation.
The commission said that Madhes government and local governments had not pledged to settle usury cases through mediation though this could create a win-win situation for both lenders and borrowers. However, it added that those loan deeds that could not be resolved through mediation and conciliation would have to be settled through the legal process.
A version of this article appears in the print on July 17, 2023, of The Himalayan Times.