Lending at High Interest Rate: Shut them down, take legal action
The High Court yesterday directed the government to immediately shut down the offices of unauthorised financial and microcredit institutions and cooperative societies and to take appropriate legal actions against them for lending at high interest rates.
In response to a writ petition, the court also ordered the finance secretary and Bangladesh Bank to form a committee to look into the activities of such unauthorised institutions and cooperative societies and submit a report to the court in 45 days from formally receiving the order.
Moreover, the HC asked the microcredit regulatory authority to make a list of names of local money lenders that have no licence and give the list to the court in 45 days.
At the same time, the court issued a rule asking the respondents to show causes as to why their failure to monitor and supervise the activities of unauthorised institutions and cooperative societies should not be declared illegal.
Secretaries at the ministries of finance and social welfare, governor of Bangladesh Bank and microcredit regulatory authority's chairman are the respondents to the rule.
The HC bench of Justice Abu Taher Md Saifur Rahman and Justice Md Zakir Hossain issued the order and rule after hearing a writ petition seeking an order to ban informal money lending businesses.
During the hearing, lawyer Syed Sayedul Haque Suman told the HC bench on September 20 that unauthorised financial institutions have embezzled crores of Tk from the people in the name of money lending.
Jubok, which had misappropriated Tk 2,600 crore in 2006, had no licence to as a lender, he said.
Syed Sayedul Haque Suman, on September 7, submitted the petition as a public interest litigation to the HC -- also challenging the failure and inaction of the respondents regarding informal moneylenders from lending money with exorbitant interest rates.
The petitioner also sought a directive from the HC on the respondents to identify the unauthorised moneylenders across the country.
Informal money lending businesses are present at every village across the country in the name of cooperative societies, the petition mentioned.
Many people also individually run money lending businesses and take high interest rates, it said. Such individuals collect weekly and monthly instalments from borrowers even though they have no registration to do this. Poor borrowers often become hostage to the lenders and end up being destitute.
A borrower reportedly has to give Tk 500 to Tk 1000 in interest every week for a loan of Tk 10,000, Sayedul Haque Suman said in the petition, adding that such money lending businesses are illegally functioning in broad daylight and need to be banned.
He also requested the HC to issue a rule asking the respondents to show causes as to why the failure and inaction of the respondents to prevent informal money lenders from lending money at high interest rates should not be declared illegal.