MCO giving loan sharks a field day?

Money lending associations say people who need fast cash during the movement control order may have no choice but to go to loan sharks.

PETALING JAYA: Two money lending associations have warned that the government may be throwing cash-strapped people to the mercy of loan sharks by forbidding the operation of legitimate lending businesses under the movement control order (MCO).

People needing fast cash during the lockdown would have nowhere to go but to the sharks, said Association of Credit Community Malaysia (ACCOM) president Rick Lim and Malaysian Punjabi Licensed Moneylenders Association (PLMA) president Palwinder Singh.

They claimed that this was their main concern, but they also complained of the toll the MCO was taking on their business.

Lim told FMT they were working remotely, but said this was feasible only for money lenders based in urban areas, where borrowers could easily make repayments online.

“It is hard for us to perform routine collections and transactions, especially in rural areas,” he said, adding that they had seen a drop in loan repayments of up to 35%.

“And we still have to pay our staff. This is why we have applied to the government to allow us to open twice a week, from 9am to 2pm.”

He said moneylenders, unlike banks, could not afford to give moratoriums on loan repayments.

“But we are not imposing late-payment charges. For those who have lost their jobs, they can come and discuss their options with us.”

He said prolonged restrictions on their operations could force some of them to close shop for good.

Even if they were allowed to open twice a week, he added, they could only make collections and renegotiate loans because the issuance of new loans requires the agreements to be stamped by the finance ministry.

This is not possible because the stamping department is closed.

Palwinder said many of his association’s members were receiving calls from people needing loans.

“But we cannot give loans because there is a need for stamping.”

He said he was worried that these people would end up borrowing from loan sharks. “If they need money, they need money. They will go anywhere to get the money.”

He also said some borrowers were under the impression that they were, like bank customers, automatically covered under the moratorium rule.

He said moneylenders could grant moratoriums only if the government provided them a grant. - FMT