Although hundreds of people have been secured from jail sentences for their failure to repay loans in the recent past, there seems to be no letup in the rising number of debtors.
The result, according to health and financial experts, is increasing rate of workers suffering from depression and related diseases.
Debt is like a cycle. When people are not in a position to repay the loans and find that they are into a debt trap, they face frustration.
This creates a pattern of negative thinking, anxiety disorder and stress, say experts
In Oman, thousands of borrowers are involved in multiple loans, including housing, vehicle, marriage, etc. There are also people who take loans to finance their extravagant travel needs.
Hameed al Balushi is a driver-cum-messenger at a private company with a salary of RO 575. He has to pay back the loan in monthly installments of RO 210. He now says he cannot afford to pay the same amount every month as his household expenditure has gone up manifold.
Hameed is not an isolated case, says a senior official at a leading commercial bank.
“The number of debt defaulters has increased during the recent past because job and salary cuts by companies coupled by extravagant spending by borrowers”, he told the Observer.
Citing the example of a customer who took a big loan to prepare for the wedding and other expenses on the hope that the repayment will be easy as his would-be wife was also employed.
“Alas! The marriage did not last even for a year. Now the man finds it difficult to meet both the ends as he has other loans for car, home etc”, said the official.
He said that people need to be made cautious and aware about the consequences of taking loans. They need to be educated to borrow responsibly.
Although none of the banks was willing to give the exact number of citizens or expatriates who have defaulted on loans, everyone agrees the number is alarming.
“The banks cannot help them in any manner except giving some extra time in genuine cases. Many borrowers approach us with pleas for waiver of installments. We cannot violate the policies of the banks,” said a senior manager at a local bank.
According to him, people should not resort to taking loans if they don’t have enough means to repay.
“What will otherwise happen is that the person gets entangled in legal issues and finally goes to jail. Banks in Oman definitely understand the problems, but have to take action”, said the official. Most banks have the policy that if a person fails to pay the installments consecutively for three times, legal action can be taken against the defaulter. However we give some people with genuine reasons extra time,” he said.
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