In the rent-a-loan business, you can pay but you can never leave

Alamgeer Khan appears in a white shalwar kameez with a waistcoat at Quetta Chai Cafe near Jamali Pul in Ayub Goth. He parks his motorcycle and takes his spot. The waiter brings the usual, green tea with ginger. Alamgeer makes a few entries in small diaries and a few phone calls. After the cup is drained, he starts on the roster of visits. They are rarely pleasant.

The fifty-five-year-old would rather euphemistically introduce himself as a businessman involved in financing than the less elegant ‘moneylender’. The business model is simple: the money is the product. People need it, he provides it, and he earns by charging for its use, a return on the capital he has invested. A less charitable definition is usury.

“Banks do the same thing,” he says, “but they write ‘Islamic’ in front so their work is considered halal, while ours, because we are uneducated commoners of society, is called usury, haram.”Men like him are doing society and the government a favour by providing a service because banks aren’t doing their job. How is a daily wage plumber supposed to rustle up a Grade 10 government officer as a guarantor or provide gold or a credit history as a guarantee? Or a housewife? Would chickens work? Banks just don’t accept the kind of surety the plebs have. And what do the poor have in this society anyway? Except pain? If you could fill in details of your track record of survival for a Guzara Scheme that might work. Men like Alamgeer meet a need and earn a little money from doing so but what is their recompense? “My money isn’t laying eggs in my box,” he adds, leaning heavily on a blunt idiom. It loses value to inflation. “We put it to use so that its value remains equal.”

What Alamgeer is failing to mention is that his ‘business’ of ‘financing’ is actually renting his money out. It locks the borrower in because the principal never gets paid.

The desperate office workerSimon is still living with the psychological scarring of being locked in the jaws of a loan shark. The office helper at a large private sector organisation makes Rs46,000 as a salary. He lived with his parents, six siblings and then his wife and children in a katchi abadi with an uncle’s family. When a family dispute turned nasty they decided to split from the uncle’s family and move out. His father’s work had dried up and not all of the siblings were earning steadily. So money was already tight.

When the cost of living crept up he began to struggle with household expenses and for his wife and child and contributions in a joint family. At one point he thought a bank loan might be a safer option to tide him over but after a review of his documents, salary and family circumstances, it turned him down. When he did the math it didn’t make sense anyway. The amount he had asked for would have to be repaid over two years, but the monthly repayment was higher than his salary. An acquaintance introduced Simon to a ‘lender’ who gave him Rs50,000 which he had to repay at a monthly interest rate of 10 pc or Rs5,000. The agreement was that the first month’s Rs5,000 interest was deducted upfront and so although the loan was for Rs50,000, Simon took home Rs45,000 in cash.

After that, he had to pay Rs5,000 every month. “The lender was surprised because I paid him back promptly every month because my salary would come on time,” Simon says. “He said he had never had a client who paid before the end of the month.” The lender usually had to go bang on doors after the 15th to demand payments amid a lot of unpleasantness. This goodwill with Simon was rewarded as a five-hundred-rupee reduction, so the monthly repayment sank to Rs4,500.

This continued for a year. By the end of those 12 months, he........

© Dawn Prism