Meter Byaj Problem in Nepal!

May 9, 2023 by 2 Comments

Meter byaj is a Nepali word. Meter byaj is basically a short-term loan that charges high-interest rates.

This type of interest rate is typically found in Nepal’s rural areas, particularly in the Terai region. In those regions, computations of interest also known as meter byaj in the Nepali language are often done in modest quantities. Especially using the regional tongue in local areas. For instance, the interest rate for borrowing Rs. 1,00,000 can be Rs.10,000 for 4-5 days or even months or years depending on the terms of the initial agreement. But the interest rate will continue to rise if the principal amount is not paid on time. This issue has been further fueled when the shark loans have taken advantage of the local people by purposely taking more interest than written on the initial agreement.

Loan shark victims, also known as “Meter byaji” held a sit-in protest and demonstrated in Kathmandu to call on the government to solve theirs right faster. Poor people who borrow money from these loan sharks pay excessive interest rates that keep rising over time. The Federal Cabinet recently decided to make the practice of “Meter-Byaji” a criminal offense. The victims are happy with this choice, however, they still want their issues resolved quickly.

How Poor People Fall Prey to Loan Sharks?

Financial experts claim that the problem of loan sharks in Nepal is ingrained and connected to political protection. Small retail borrowers in rural regions are sometimes unable to access conventional financial institutions, placing them at the mercy of predatory lenders who impose high-interest rates and use violence to recover debts.

The urban-centric orientation of Saving and Credits Cooperatives, which gives rural borrowers little choices for getting inexpensive loans, further exacerbates the lack of access to financing. Small retail borrowers in rural areas are often unable to access formal financial services. Ultimately leaves them vulnerable to predatory lenders who charge outrageous interest rates. And if the loan is not paid back on time they even use violence to recover the debts.

The lack of access to finance has also heightened the urban-centric focus of Saving and Credits Cooperatives. This has left rural borrowers with few options for obtaining affordable credit. Likewise, the professor of management at Kathmandu University Achyut Wagle argues that local governments might play a role in regulating small retail loans and developing strategies to assist those who have fallen victim to loan sharks.

In addition, Wagle thinks that government initiatives to combat loan sharks and guarantee that rural borrowers have access to reasonable loans should include financial education and official financial services.

Overall, the issue of loan sharks in Nepal emphasizes the need for increased financial inclusion and the creation of institutions and laws. Finally, that would make it easier for small retail borrowers in rural regions to acquire credit.

PM Prachanda Assures to Solve This Problem

To address this burning issue the government has launched many attempts to solve the problem. The agitated citizens who took to the streets in search of the government’s assistance and support have been given assurance. That their issues will be handled by the Prime Minister, Pushpa Kamal Dahal ‘Prachanda’, through the Home Secretary. The Chief District Officer of Makawanpur, Rajendra Dev Pandey, conducted a meeting with the protesting farmers at the Prime Minister’s request and gave them the assurance that the government was working to enact relevant laws and had already launched a case against loan sharks.

The farmers declared that they had joined an anti-loan sharking movement and that they would not return until the government passed suitable regulations. Additionally, they requested blankets and transportation management to send them to Kathmandu, where they planned to demonstrate against loan sharking. The Chief District Officer gave them blankets and promised to help them get back to their houses.

Puspa Kamal Dahal
Puspa Kamal Dahal (my Republica)

The Ministry of Home Affairs has sent the draft of the relevant law to the Ministry of Law, Justice, and Parliamentary Affairs. The Prime Minister instructed the secretary of the Ministry of Law to present the proposal for the associated law to the Council of Ministers meeting and register it with the parliament. The parliament will shortly register the law.

At least 350 persons have already been arrested for engaging in and encouraging loan-sharking by the government, which has already taken action against them.

Meter Byaj Victims Finally Getting Justice

Following the intense protest done by the victims of meter byaj. Finally, the Nepalese government has taken significant steps to address the issue. Likewise, officials and representatives of loan-sharking victims signed a five-point agreement. In the agreement where the government promised to establish a high-powered commission to investigate and resolve the problems.

According to the agreement, the next Cabinet meeting will create the commission, and the agitators will call off their protests. Furthermore, the government has also promised to quicken the process of changing the laws to make shady lending illegal.

Victims of meter byaj protesting on Kathmandu
Victims of meter byaj protesting in Kathmandu (The NEPAL Weekly)

Likewise, the agreement also suggests the creation of a district-level coordination/facilitation committee under the direction of the chief district officer to handle complaints relating to loan sharking. Similarly, police officers, district government attorneys, chiefs of the land revenue and survey offices, bank and financial institution officials, as well as victims of loan sharking, will make up these committees.

Additionally, these committees will assist the commission’s work, gather victim complaints and grievances, aid in the gathering of evidence, offer legal assistance, and carry out awareness campaigns. Likewise, Prime Minister Pushpa Kamal Dahal had earlier promised to form a high-level panel to address the problems of those who had fallen victim to excessive interest rates.

Overall the victims had to trek for 11 days to reach Kathmandu, the capital city of Nepal. After a six-month break following the five-point deal with the administration that ended their demonstrations last year, they have returned to the city. Finally, there have been signs of improvement in this matter since the government became involved.

Also read: Flydubai Flight FZ 576 Engulfed in Flames in Kathmandu’s Sky!

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