Financial predators are active in the Indian and Filipino communities and keep a stranglehold on borrowers and their families back home.
Beware of loan sharks, UAE expats told
ABU DHABI // People with cash problems were urged yesterday to avoid loan sharks.
The financial predators are active in the Indian and Filipino communities and keep a stranglehold on borrowers and their families back home.
"Tens of millions of dirhams are in circulation in this business at interest rates of up to 10 per cent a month," according to a report in the Ministry of Interior's 999 magazine.
The magazine's editor-in-chief Lt Col Awadh Saleh Al Kindi said: "We encourage victims to come out in the open and seek proper help from the authorities.
"We urge everyone to stay away from these loan sharks and, where possible, inform the authorities … so we can stop their insidious practices."
The Philippine consul general Frank Cimafranca also urged victims to seek help from the authorities if they found themselves in debt to loan sharks.
In the Filipino community, moneylending is known as "five-six". Any amount of a principal loan is charged at 20 per cent interest over just three months.
"Some of our compatriots here make a living out of lending," said Nhel Morona, the country co-ordinator for Migrante Middle East, a migrant-rights group.
"For example, you borrowed Dh1,000, you'll need to pay back the lender Dh1,200 in instalments over a three-month period.
"However, a default in payment will mean an additional 10 per cent interest every month, so you may end up paying Dh1,320."
A common strategy used by loan sharks is to demand passports as collateral or to guarantee a loan.
Victims whose passports were illegally confiscated are urged to file a complaint with the police.
Mr Cimafranca said one Filipino approached the consulate to seek advice on behalf of a friend whose passport was being withheld by a lender.
"The passport is the property of the Philippine government," he said. "It's not an asset that you can convert to satisfy an obligation.
"It's not even effective and is of no value to the lender since the borrower can declare it missing and get another passport. The loan is a personal obligation so one just needs to pay it off."