Major Teoh’s Blog

February 6, 2007

Why is there a sharp rise in loan-sharking?

Filed under: Finance — Major (Rtd) Teoh @ 3:39 pm

Why is there a sharp rise in loan-sharking?

http://www.majorteoh.wordpress.com/

The answer lies in the decline in the number of traditional pawn-shops. These traditional pawn-shops are a boon to the poor. They are known as the poor man’s banks. Anyone can walk in and pawn anything without being asked embarassing questions.  There are no forms to fill in. You just have to produce your identity card or your international passport. The procedure is very simple. Loans are either approved or disapproved on the spot. The whole transaction can be over in a matter of minutes. Everybody knows the rules of the game. The more pawn-shops there are the better. Those who are hard pressed for cash can virtually shop around for a fair price for their articles they wish to pawn.

Of course, there are unscruplous pawnbrokers but at least, the police and the authorities know where to go to and whom to question whenever there is a complaint of over-charging of interest. Any attempt to cheat can be attended to immediately. The situation can be controlled.

The banks nowadays are not taking care of the needs of the poor. Banks nowadays will lend you as much money as you can prove to them that you have. If that being the case why should you borrow at all. Why would you borrow RM 1.00 when you have RM 1.00? People borrow because they have no money and that is why they go to the bank.

The menace of loansharking can be minimised if more licensed pawn-shops are opened at strategic places all over the town to help the poor.

Regards,

Major (Rtd) Teoh

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