ABU DHABI // Some money lenders see nothing wrong with their activities and say they are simply assisting those who badly need the cash.
A 39-year-old Filipina, who asked to be called Annabelle to protect her identity, earned Dh1,600 a month as a librarian at a book shop after she arrived in Dubai in 2006.
She wanted to earn extra cash, so she began lending money to her friends who, in turn, referred her to others and so her business grew through word of mouth.
"A friend needs to act as a guarantor for someone who needs the money to pay for his or her parents' medical expenses, the tuition of their children or to buy an expensive mobile phone or the latest gadget," she said.
She lent at an interest rate of 10 per cent. For every Dh1,000 borrowed, the borrower had to pay Dh100 in interest per month. The maximum amount that could be borrowed was Dh5,000.
"I was a small-time lender," she said. "I did not keep their passports as guarantee. Once, I required a borrower to hand over her ATM card and labour card since she owed me Dh3,000."
She earned about Dh3,000 each month as a moneylender but found it too stressful and decided to quit in January 2011.
"Many people visited me at home to borrow money and I hardly had time to rest," she said.
Loan sharks take advantage of vulnerable borrowers by charging rates of interest higher than those available from conventional sources, such as banks. This means borrowers face demands for payment of hundreds or even thousands of dirhams more than the sum they borrowed.
Annabelle, who now works as a sales executive in Abu Dhabi, did not want be labelled a loan shark. She insisted her business was scrupulous and that unlike her, loan sharks charge exorbitant interest rates and harass borrowers when they are unable to repay on time.
In Ras Al Khaimah, some lenders offer smaller loans - between Dh500 and Dh2,000 - to coworkers. Borrowers do not need to part with their passports, ATM cards or labour cards.
A Filipina who has lived in Ras Al Khaimah for seven years lends money to her cash-strapped work colleagues, charging them 5 per cent interest a month. She can lend up to Dh2,000.
"I do not keep their passports but they must pay me back within two months," said the 26-year-old waitress.