Rastriya Swatantra Party MP Ganesh Parajuli Highlights State's Failure in Addressing Loan Sharking

Kathmandu. Ruling party Rastriya Swatantra Party (RSP) MP Ganesh Parajuli has drawn the government's attention to the state's helplessness forcing citizens into the clutches of loan sharks. Speaking in Thursday's House of Representatives meeting, RSP MP Parajuli drew the government's attention to the fact that usury, or unfair lending, remains a dire problem in Nepali society.  

'Legal provisions have been made in the 'Some Nepal Laws Amendment Act, 2080' to control unfair lending. However, it has been realized that laws made without adequate study and research will complicate the problem rather than solve it,' said Parajuli.  

He stated that banks and financial institutions do not have access to all corners of the state, and not all citizens have easy access to loans when needed.  

'It is a practical reality that personal loans are prevalent to meet urgent needs such as illness, children's treatment, arranging funds for foreign employment, or other emergencies,' said Parajuli.   

He mentioned that although sections 478 to 481 of the Civil Code, 2074, stipulate that interest exceeding 10 percent per annum cannot be charged on household loans, no one lends money at an interest rate lower than 10 percent.  

'On the other hand, the government is directing the registration of loan agreements with the concerned bodies to protect people from loan sharks. But the question is, when the actual transaction does not fall within the 10 percent limit, the citizen who is in distress is forced to register a promissory note with the state body for three times the amount they borrowed,' said Parajuli.  

He stated that this not only creates a deep gap between law and practice but also that the state's helplessness forces poor people to fall into the clutches of loan sharks.  

MP Parajuli emphasized the need to review and update laws in a timely manner by conducting detailed studies on the interest rates that can be charged on personal household loans based on social needs.  

'Let there be a serious discussion on making personal household lending legal with clear legal standards, mandatory written promissory notes, and provisions for registration with the concerned bodies,' said Parajuli.