MORE than one unequivocal Quranic verse prohibits usury. In simplest term, usury is when the rich exploits the need of the poor by lending him a certain amount on condition of repaying it with more than what he borrowed.
There has been a huge protest by those who describe themselves as ‘awakened’ in terms of traditional banking. The law affirmed their lending of money on non-profit (interest) basis and allowed them to open what is known as Islamic banking establishments.
These establishments ended up receiving the equivalent of what interest operated banks earn, but under different titles which these people derived from their yellow books.
Personally, I see no problem in traditional and Islamic banking establishments earning interest. Money is like a commodity which stands on its own and the value of money I lent to you today will definitely be different when you return it after a year. It is enough to assume you have prevented me from spending it and you enjoyed spending or trading with it. Without dispute, this has value.
Nonetheless, our topic today is not related to professional financial establishments such as traditional and Islamic banks. Our topic is related to what our noble book (Quran), Arabs and non-Arabs refer to as ‘loan sharks’ in the fullest sense of the phrase.
They exploit the needs of people by lending them money on condition of ‘shylocks’ – the term derived from a Venetian Jewish moneylender known as ‘Shalah’ who is a character in William Shakespeare’s play, “The Merchant of Venice.”
In the play, Shylock lends money to someone and sets guarantee for the loan – a pound of flesh. This means if the borrower defaults on the loan, Shylock will cut a pound of his flesh.
Kuwait’s Shylock markets himself and his job without fear or shame on social communication media platforms and other places. The process which the grandchildren of the devil go through is as follows: “Someone announces his readiness to buy loan in cash. For instance, someone owes a bank KD 20,000; the loan shark follows him and promises to pay his loan in return for 10-15 percent interest within a week. This is done after studying his financial status.
In most instances, these lenders have partners in local banks who provide them with information. After clearing the bank loan, the borrower goes to the bank and asks for a new loan – about KD 30,000. Immediately, he pays KD 20,000 which he took from the loan sharks and KD 3,000 interest, leaving the borrower with KD 7,000.
The borrower ends up having new loan from the bank – KD 30,000 – and so forth. These sharks secure their rights by forcing the borrower to sign a promissory note with double the money, in addition to confiscating his travel or citizenship document and other vital documents. If the borrower pays late, interest continues to surge and he is forced to pay the value of the promissory note.
One of the frustrating advertisements states: paying bank loans – call us – settling debts and money troubles – issuance of new loans – we deal with blacklist … which means even when a bank blacklists someone from taking a loan, these sharks lend money to such people on very difficult conditions.
The question here is for the Central Bank of Kuwait and its elegant building along the Gulf Street: “Why haven’t you taken any measure against these shylocks that exploit and take advantage of the desperation of those in need, or do you have selective oversight on people?”
By Ali Ahmed Al-Baghli
Former Minister of Oil