High-interest rates on private loans given by moneylenders are crushing needy citizens.
On a chilly December evening in 2008, Iqbal Muhammad Lodhi and his two sons retired to an upstairs room of their Sunehri Masjid Road house in Peshawar, to end their lives once and for all.
Lodhi, who ran a small garment outlet in the Gora Bazaar neighbourhood of Saddar, asked the females of his family that evening not to disturb their prayer of supplication — offered to get rid of the ballooning usurious loan they had borrowed a few years ago to expand their business.
Before they retired upstairs, the men borrowed a ballpoint from one of Iqbal’s granddaughters so they could accurately record the number of recitations. Early the next day, the granddaughter went up to collect her pen before she left for an exam she had scheduled for that day. Instead, she found the door locked from the inside.
Upon receiving no response from her father, uncle and grandfather, the panic-stricken girl rushed downstairs and informed the rest of her family. The resulting commotion led to the neighbours breaking down the door.
Inside, Iqbal Lodhi and both his sons were found dead, lying in a pool of blood.
“The pistol was in Iqbal’s hand,” said a police official, who had initially investigated the case. Curiously, the family members had not heard the sound of a gunshot during the night.
Following a complaint from Seema Lodhi, the wife of Iqbal Lodhi, the East Cantonment police station initiated an investigation of ‘unnatural death’ under section 174 of the Criminal Procedure Code. But on the third day, women of the Lodhi family suspiciously left the city under the cover of night and shifted to Lahore.
Debt that destroyed a family
"The family had initially approached banks for a loan; however, due to cumbersome and long procedures, they decided to approach a local moneylender,” the police official informed Dawn.com.
At a heavy price, an influential money-lender agreed to lend Rs200,000 to Lodhi and his sons.“He gave Iqbal only Rs180,000 and retained Rs20,000 as the first installment of interest,” a police official said.
Lodhi, who had promised to repay the loan within a year, failed to repay it in time. And in re-negotiating the contract with even more stringent conditions, the loan eventually reached several million rupees.
After the family lost their business, thugs sent by the money-lender would frequent their home, beat up male family members, hurl abuses at the females and issue threats of dire consequences if they failed to repay the borrowed amount with interest.
Not only had the Lodhi family lost everything, in addition to facing constant harassment and coercion, they had succumbed to stark poverty while trying to surmount the massive loan.
It was during this time that one of Iqbal’s daughters-in-law gave birth to a son at the Lady Reading Hospital in Peshawar. The family couldn't afford to pay for a taxi to bring the newborn and his mother back home, who had to walk several kilometres to make their way back.
Police officials say that the family had not mentioned any known reason for suicide in their initial complaint, and had left the city by the third day.
"It was only later we came to know that they had committed suicide after failing to pay the huge loans,” police added.
Since the surviving family members did not nominate a suspect in their FIR, the investigation failed to bear any fruit. Nor was there a law back then to control private money-lending.
The case was officially closed on July 15, 2017, and consigned to the wastebin of unsolved cases.
Catching flies as hornets go free
Although this heart-wrenching story of the Lodhi family's suicides highlighted the issue of massive interest on private loans, the illegal practice remains entrenched in the provincial capital and other districts of the province.
Almost eight years after the Lodhi family’s tragedy, the Khyber Pakhtunkhwa government introduced a new law called the ‘Prohibition of Interest on Private Loans Act in 2016’, thereby banning all interest-based private loans across the province.
Read: Effective implementation of law on usury urged
Soon after the new law was passed, the police actively started collecting information on men involved in illegal money lending with inexcusably high interest rates. The data collected depicts the number of lenders and their addresses, in addition to collecting other details. However, the police have yet to take action against the lenders.
Hoping for justice under the newly enacted law, Sardar Khan was the first to register a First Information Report (FIR) under the new law. The FIR states that he borrowed Rs735,000 for six months on an interest of Rs485,000.
“During a one year period I have returned Rs420,000, but due to continuous threats I also gave the lender a cheque of Rs1,000,000,” Khan tells the police, adding that now the lender has demanded an additional Rs485,000 as the interest amount and has also forced him to sign on a stamp paper.
After registering the FIR, the police arrested the said lender and put him behind bars. But the very next day he was released on bail.
In light of the new law, police data shows that a large number of victims filed applications seeking action against money-lenders. The Khyber Pakhtunkhwa Police says that from August 2016 to December 2018, 613 FIRs have been registered across the province under the 2016 Act, out of which five have been registered on the complaint of women.
Explore: Riba or interest: where the problem lies
The data further states that out of 834 accused nominated in the FIRs, 794 have been arrested and all the cases are presented in court, but so far no one has been convicted under the new law.
Director Public Relations, KP Police Waqar Ahmed says, that due to tradition and culture victims do not register an FIR and in some cases after registration of FIR, do not regularly follow through with the case in the trial court.
“This is a serious issue of our society,” says Ahmed, adding that without the victims’ support the menace cannot be rooted out from society and that it's the courts’ turn to decide the cases and provide justice.
Sardar Khan's case has been in the courts for the last two years.
He is now thinking of holding a jirga with the lender to settle the case out of court.
How women struggle under a culture of exploitation
Despite what the police claim, lenders openly operate in the provincial capital, and with the passage of time, women lenders have also entered the market.
“Women are used by men to attract female borrowers, who urgently need money,” a senior police officer told Dawn.com.
Fifty-year-old Halima, a resident of Peshawar's Yakatoot area of the walled city, is another victim of exorbitant interest on private loans. She still remembers the day when her only son, Ahmed, lay dead on a bed at the Lady Reading Hospital. She had no money to collect his body, transport it and carry out his funeral and burial.
In a hurry, Halima was told to borrow money with interest, which she could later payback after the funeral had been arranged.
She took Rs30,000 from a lady in her neighbourhood.
But Halima couldn't arrange the money in time to pay the loan back to the lady and both of them instead, decided on payment of Rs2,500 per month interest, which still continues till date.
Halima works at a local Khan's house on a Rs6,000 monthly salary, out of which Rs2,500 she pays as an interest to the money-lender.
She has paid over Rs70,000 in installments for a Rs30,000 loan she borrowed.
"I can't complain because she helped me out at a time when I desperately needed money," says Halima, who looks more aged than her actual age.
Although Halima has no savings, she hopes to one day get rid of the unending interest on the loan she borrowed.
Unfortunately, Halima is not the only woman faced with this problem.
Zanib, a mother of two daughters and wife of a labourer, constantly worries about their marriage prospects. She arranged the marriage of her elder daughter, but it was delayed due to problems with the dowry.
A relative introduced her to an elderly woman, Gul Pari, who provided loans on interest to needy women. She borrowed Rs200,000 for a period of one year at Rs20,000 interest per month.
With the money in hand, Zanib easily arranged her daughter’s dowry and married her off. But the repayment of the heavy interest on the loan soon became a dilemma for her.
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Zanib, who works at a private hospital, eventually paid the interest for three months before requesting the money-lender for some respite.
But the angry Gul Pari, approached Zanib's daughter's in-laws and told them their daughter-in-law's dowry was arranged from ‘sood’ money and his son’s mother-in-law has a habit of borrowing loans on interest.
Zanib's daughter was sent home on the first anniversary of her marriage. She was later divorced and her husband sent the dowry back. Zanib now refuses to repay the interest and has clearly informed the lender that she will only pay back the loan and not the corresponding interest.
Her well-wishers have advised her to register an FIR, but Zanib is hesitant about involving the police. She alleges that the money-lenders have strong contacts with police high-ups, especially the SHOs.
Open waters for sharks
For the last five years, Shazia, 45, has been providing loans on interest. After receiving her share of the inheritance from her brothers, she started lending money. “My clients are only women and I give a maximum of Rs50,000 as a loan,” Shazia says, adding that this is very difficult work as her clients often don't return the money on time.
Shazia always demands a strong reference with a signed agreement, to avoid police action. She mentions that the interest amount and the loan are fixed and should be returned within six months or a year.
According to her, women get scared and can be pressured for early repayment, adding that the women are afraid of openly being known as paying interest in society.
“This, being called a sood khor, is the biggest fear among the women borrowers. We exploit this to ensure the repayment of the loans and interest.”
Similarly, 60-year-old Gul Zaman Haji, whose hujra is situated a stone's throw away from a police station in the walled city of Peshawar, is a known money-lender in the area.
"I am going for prayers in the mosque. You take care of the client," Haji tells his assistant.
After his daily prayers, Haji returns and parks himself on a traditional charpai. He starts listening to a number of locals who are seeking loans. After hearing them explain their situation one by one, Haji decides to give a loan to only two persons, and the remaining four return empty-handed.
“These two have a strong reference,” he says, adding that a reference is must and mandatory in this business. “Our work is very simple and easy as compared to banks. It all depends on trust.”
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“This is my business: I have money and someone who needs it comes to me for help. I give them money on a reasonable profit.” Sharing the details, he informs that he started the business of interest on private loan some 18 years back, initially at Rs100,000, that has now crossed Rs1 million.
He goes on to say that he provides cash loan that starts from Rs50,000 to Rs500,000 on 20 to 25 per cent interest for a period of six months or one year, adding that currently, 20 installments are underway.
According to Haji, so far no one has filed a complaint to the police against him, and says, “Why would borrowers complain against me? I do not force anyone to borrow money on interest, and in reality, I am only helping the poor at a time of need.”
But how does he make people repay the borrowed loan with interest? He says that if someone refuses to repay the loan back he uses force, calls the police and adopts other pressure tactics to ensure repayment.