Loan sharks warned over fleecing people

By Kabeer Yousuf — MUSCAT: FEB. 27 – Money lenders who target needy people and lend money at a premium are warned by the apex bank of Oman calling it illegal to deal in national currency without the permission of the bank. There have been cases where people have been given easy loans for an exorbitant rate of interest and virtually entangling them in the tentacles of having been to pay interest and compound interest making life miserable which often lead to untoward and unpleasant consequences.
“Carrying out banking activities without the approval from the Central Bank of Oman is a crime prima facie and can lead to dire consequences,” a source at the CBO told the Observer.
“Lending and borrowing money on interest, exchanging Omani Rials for other currency and vice versa are criminal financial crimes and can lead to severe punishments by the law of court,” he added.
His statement comes in the wake of a number of cases where many people were victimised by these unscrupulous loan sharks who force them to keep paying interest at the threat of blank postdated cheques (PDC) signed by the victims. The Royal Oman Police (ROP) have reported many such cases and in many an incident, the borrowers had to end up their lives after the loans sharks continued to threaten them.
“There are some lenders who help borrowers secure an LLC licence upon paying RO 150,000 where they will be benefitting to the tune of RO 5,000 within a short period of a week or two.”
He further said that there have been cases where people arriving in Oman exchange their foreign currencies with people trading in money illegally.
“Such practices too are illegal and people should keep aloof from such currency exchanges. Anyone found to be violating the financial rules and regulations of the country is subject to punishments ranging from fine, jail and deportation.”
In most cases, these loan sharks take the borrower’s passports or signed cheques as guarantee or any other valid document to speed up payment of interest, which is again illegal according to the law of the land.
A source at the ROP said that an individual who is involved in usury, or lends money at unreasonably high rates of interest, faces a jail term of at least three months plus a fine of at least RO 200, according to the Omani Penal Code.
According to a source at the Ministry of Awqaf and Religious Affairs, usury, or the charging of interest, is forbidden by Law of Sharia. “Money is not a commodity, nor does it have a value over time if left unused, according to the law. Therefore, interest earned is an unjust income”.
A criminal lawyer practising in a higher court of Oman said bullying, coercion or forcing someone to enter into an unlawful contract is a criminal offence.
“If the lender takes advantage of the borrower’s need and weakness, the punishment will be a jail term of up to three years plus doubling of the fine,” said a criminal lawyer, adding that a repeated offence carries a jail term of up to five years followed by deportation. “The issue starts with the informal procedures and ease of getting a loan from an illegal lender for a needy person,” says a social worker in Muscat. “They (loan sharks) might appear to be very friendly and helpful when they hand over the money, but sooner or later they become the exact opposite when it’s time to collect it,” he added.