<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>April 20, 2009
LOAN-SHARK MENACE
</TR><!-- headline one : start --><TR>Use microloans to help the poor
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE recent proposal to punish clients of loan sharks could make it more difficult to prosecute illegal moneylenders.
Borrowers and lenders could work together to evade the law as both could be punished if caught. The proposal sends the signal that reporting loan sharks to the authorities could get clients who report them in trouble too.
Microcredit, which is the extension of small loans (microloans) to the poor to spur entrepreneurship, has been well-establish in many countries.
If Microcredit is encouraged here, it will hurt the loan sharks' business and pump liquidity into the economy as cash-rich people who are not satisfied with banks' low fixed deposit rates can use their money to help the less fortunate. A microloan of, say, $2,000 from a well-meaning lender can go a long way towards helping someone who has lost his job.
Even at an annual interest of 2 per cent to 5 per cent, it is a better deal than borrowing from a loan shark. Microcredit will not only deprive illegal moneylenders of business, but also give a chance for those who are cash-rich to help others.
Yang Ing Woei
LOAN-SHARK MENACE
</TR><!-- headline one : start --><TR>Use microloans to help the poor
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE recent proposal to punish clients of loan sharks could make it more difficult to prosecute illegal moneylenders.
Borrowers and lenders could work together to evade the law as both could be punished if caught. The proposal sends the signal that reporting loan sharks to the authorities could get clients who report them in trouble too.
Microcredit, which is the extension of small loans (microloans) to the poor to spur entrepreneurship, has been well-establish in many countries.
If Microcredit is encouraged here, it will hurt the loan sharks' business and pump liquidity into the economy as cash-rich people who are not satisfied with banks' low fixed deposit rates can use their money to help the less fortunate. A microloan of, say, $2,000 from a well-meaning lender can go a long way towards helping someone who has lost his job.
Even at an annual interest of 2 per cent to 5 per cent, it is a better deal than borrowing from a loan shark. Microcredit will not only deprive illegal moneylenders of business, but also give a chance for those who are cash-rich to help others.
Yang Ing Woei
