Indian Loan Sharks in Guimaras

Had lunch at my favorite talabahan in Guimaras the other day.  My asawa went up front to order her usual two bowls of oysters at P30 each. I requested a grilled chicken along with four sticks of pork BBQ. And a bottle of Pilsen, of course.

the shark(Photo Source:asiapacfinance.com)

As I was stripping a tasty pork BBQ morsel from the sharp skewer I had just stuck in my mouth, I noticed an Indian walk in. Not Native American. No, he wasn’t wearing a headdress like some Victoria’s Secret’s runway model.  But a guy from India. He was accompanied by a female Indian.

I’ve never seen someone from India in over three years of living in and visiting Guimaras. Seen a few in Iloilo where they even have a Sikh temple.  My asawa has spied some before on the pumpboats, their motorcycles used for their daily collections, on board. The couple immediately caught my attention. 

He was a Bombay loan shark. He stuck his head into the kitchen window.  I saw three Filipina workers inside peeling off  P100 bills and handing them to the man. No doubt for a 5/6 loan.

5/6 simply means the amount you borrowed must be returned with 20% interest added. Example: If you borrowed P1,000, then you  should pay it back with 20% interest: 1,000 x .20 = 200. You have to pay P1,200 in return.Philippines.

The pretty pinays stepped inside the restaurant area and pointed out the menu dishes for the day to the lender. I had no doubt he would be helping himself to a free lunch. The workers were tripping over themselves to make sure the man had plenty of food.  He was receiving the full-blown rock star, celebrity treatment many foreigners encounter in the Philippines.  A foreigner that gives you money attains almost god-like status. 

Soon another Indian man, larger than the first, came inside the talabahan. He took off his motorcycle helmet and sat down to eat with his friends. I nudged The Sainted Patient Wife  who was seated next to me. She, too, had seen the money exchange and of course, knew immediately that the workers were paying back a 5/6 loan.

The Indians are known as “last resource lenders.” Indian moneylenders are also sometimes preferred by Filipinos over their local counterparts. Indian lenders, most of whom are men and are more discreet, according to borrowers. The locals say that Filipino lenders are usually women who tend to gossip about their clients.

In 5-6 transactions, while legal documents are not signed, lenders get their customers’ signatures in notebooks, calendars, or even on a piece of paper. They make entries in their own handwriting so the customer cannot tamper with the record.

The Sainted Patient Wife reports that none of her family has used any of the Indian lenders. And yes, perhaps that was due to the fact that my own spouse has personally loaned out thousands of pesos to some relatives (though never charging any interest.)

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Is 5/6 loan sharking legal in the Philippines? Here’s what the law states: Central Bank of the Philippines issued C.B Circular No. 905-82 adopted on December 22, 1982 but which took effect on January 1, 1983 effectively removing the ceiling on interest rates both for secured and unsecured loans regardless of maturity. The news of its passage turned out as  good news for loan sharks.

The Supreme Court ruled in the case of Florendo vs. Court of Appeals, that “by virtue of CB Circular 905, the Usury Law has been rendered ineffective.” “Usury has been legally non-existent in our jurisdiction. Interest can now be charged as lender and borrower may agree upon.” (Source: PhilippineBlaw.com)

An article in the Inquirer News last year reported that the Bureau of Internal Revenue (BIR) planned to go after Indian nationals involved in money lending activities. They admitted that it would not be easy to collect taxes from them.

Venerando Homez, revenue district officer for  Kidapawan City, said at least a dozen Indian nationals were suspected of involvement in money lending activities, mostly to small entrepreneurs there.

Homez said they were certain the Indian nationals were not paying taxes and did not have business permits.

At least a dozen Indian nationals lending capital to small business establishments, particularly restaurants, sari-sari stores and vegetable vendors can be seen roaming around the major thoroughfares in the afternoon to collect the daily payments from the debtors, he said.

But Homez has a problem. How to build up cases against these Indian nationals.

“Only the Economic Intelligence Investigation Bureau (EIIB) based in the BIR main office has the authority to reprimand or invite foreign money lenders operating in various places in the country,” he said. But that office has been eliminated, Homez reports. 

Homez said that the BIR  would have to get the testimonies of those who had borrowed money from the Indian money lenders, but admitted that would be a difficult task. 

raj-singh

(Photo Source:Philippine Center for Investigative Journalism)

Aside from dodging the BIR, Bombay loan sharks have to occasionally dodge bullets as well in the Philippines. A recent article in The Daily Guardian, an Indian newspaper, reports that over 150 Indians, many of them Punjabis, have been killed in the Philippines.

But you won’t find the Philippine government agreeing with those statistics. Although, the Philippine National Police (PNP) admits its records are inaccurate there is a wide disparity from figures the Indian government reports versus the official Philippine government statistics.  (Source: Philippine Center for Investigative Journalism.)

Still, police records and news reports strongly indicate that the attacks against Indians are indeed on the rise, and range from holdups to kidnapping to outright ambushes, and occur even outside of Metro Manila. Police records alone show that in 2005, there were only three crimes against Indians, but the figure shot up to 13 in 2006. From January to June 2007, the PNP had already recorded eight cases with Indians as victims. 

The Daily Guardian reports that the resentment against the Bombay lenders also showed in adverse publicity in the Philippines. In fact in 2006, the Punjab Revenue and Rehabilitation and NRI Affairs Minister had cautioned the people of Punjab against indulging in money lending in Philippines, noting that Punjabis were joining mafia gangs with Chinese and Filipinos engaged in organized extortion and kidnapping.

“Killing of Punjabis is on the rise in Manila because there has been no remedial action,” said former Union minister and Akali leader Balwant Singh Ramoowalia. He has called upon the Centre to take up the issue with the Philippines government to ensure the safety of the Punjabis in Philippines.

As I downed another bottle of cold San Miguel Pale Pilsen, the coldest bottle of beer I’ve ever had at this talabahan, and served by a 14-year-old waitress, I saw the Bombay loan sharks leaving. I’m sure they had more rounds to make in the sleepy little capital of Guimaras and would no doubt be adding even more pesos to their wallets.  It’s a dirty job, sometimes risky, but I suppose somebody has to do it.

27 comments

  1. Dave,
    Happy to see your comments back. It’s unfortunate that filipinos have to turn to those kind of people to get a loan. I wonder what the Indians would do if the loan was not repaid? Take care and have a nice day

    1. Good to be back, PapaDuck. Enjoyed the visit from your G/F Anne and you this past October. Thanks so much for your support.

      Here’s some info from an interesting article I found about Indian moneylenders, PapaDuck, after this post was written:

      A customer who does not want to pay the Indian 5-6 usually hides. She asks her storekeepers or neighbors to “Tell the ‘Bombay’ we are not here,” and when he comes back the next day, they say the same thing. Though the moneylender may be aware that the borrower is at the back of the store, he cannot do anything but return the next day. If the borrower’s store is located along his regular route, the lender tries to visit every day for one or two months. If the borrower still does not appear, the lender gives up.

      In another case, a policeman in the public market actually handled the 5-6 business among the vendors, with the big-time “Bombay” serving as his financier. This moneylender also enjoys good relations with the goons in the area. Every two to three weeks, he tells the small neighborhood general store owner, also a client, to provide a crate or two of beer to the goons, charged to him, saying, “You can tell them that it is my birthday today.” He told us he allocates around PHP 1,000 per month for relationship-building with the neighborhood gangsters. We do not know how much he actually pays.

      In spite of the common belief that Indian 5-6 moneylenders resort to violence to collect from delinquent borrowers, because they are vulnerable to Filipino retaliation, it is actually difficult for them to be aggressive or violent toward people who default. And if an Indian lender does become violent, his bad reputation will spread rapidly and make it difficult for him to acquire new accounts. One lender recounted: “I had a fight with a client who was drunk. He refused to pay and threatened me with a knife. I could not do anything, so I left the place quietly.” (source:kyotoreview)

  2. ….”because there has been no remedial action” just about says it all, Dave. It applies to everything from a failure to wear lifejackets or crash helmets, to the 14 year old waitress (in all probability) driving herself home on her own motorbike without, obviously, any licence, insurance or the remotest concept of traffic rules.
    When I’ve been at Immigration fighting with the serpentine requirements for yet another photocopy of a photocopy, I have noticed large numbers of Indians applying for residency. One guy said he was married to a filipina, but that he “couldn’t remember her name”.

    1. “Couldn’t remember her name?” Keith, that line reminds me of my old days of hanging out at our local redneck bars in Central Illinois before I met The Sainted Patient Wife.

      But your remarks drive home something I’ve observed in my 3+ years of living in the Philippines. There may be laws and regulations on the books but having them enforced is an entirely different matter. After I paid my bill at the talabahan I remarked to the young lady that served our beers that this was the coldest bottle of San Miguel I’ve ever gotten here (Brother Tom thinks it came from the secret stash reserved for the owner.) I also asked her age since I knew she was no where near the legal age to serve adult beverages in the States. When she told me 14, I told her that in the United States she would not be allowed to bring us beers to our table. Ahhh, life in the Philippines.

  3. Glad to see commenting back Dave. The 5/6 lending that goes on there is no different than the legal loansharking that takes place in the U.S. Here, you will see customers on a weekly basis, come in for their payday loan…week, after week, after week. They are “trapped” in the system and like the poor Filipino, there is no way out for many of these people. These payday lenders are making tons of money on APR’s that can exceed 200%. Just wrong in my book. :/

    1. Good analogy, RandyL. I agree that payday loans should be reigned in, also.

      I’ve checked out your new website, Randy, but had difficulty leaving a remark. WordPress kept asking me to log in when I tried to use my Yahoo id. Good luck on the site. Here’s the LINK, kids.

  4. Hi Dave
    Regarding the different laws here to those in our own countries. We have a sari store about 50 metres from our apartment here in Angeles. I gave Ivan 100 peso to buy some chips and he returned with the chips and a bottle of SML. Ivan is only 4 years old.

    1. You have to love the Philippines, Murray. Reminds me when I was a kid in the 50’s. My Dad would have me go to the store and buy him a pack of smokes. I was older than Ivan, however. Six years old. But I never tried to buy any beer, though.

  5. Dave..
    Iam just curious if this Indians (bombay) as well known here in the Philippines has a corresponding permits required by Philippines Government, i have a questioned in my mind, why they are openly doing business like this 20% interest for every 1000pesos,everywhere we can see bombay doing 5/6, is this
    5/6 loan can really help people to satisfied their everyday needs.. wowww if this 5/6 can really help to fight the poverty of filipino people.. i want to engage in this kind of business to uplift my kababayan the way of living here.
    Thank you and Good luck to this site that they given a chance and apportunities the readers to say about their feelings. wish you and your family a Merry christmas and Abundant New year.

    1. Thanks for the comment, Anne, and a Merry Christmas and Happy New Year to you, also.

      To my knowledge, the majority of the Bombay lenders do NOT have permits. Most officials just look the other way. Like when I noticed a table full of 13-year-old kids openly drinking Red Horse at our local fiesta in Guimaras. No one seems to really care. I asked a PNP officer about it the next night. He told me that they shouldn’t be served the beer but that’s the way it is. There are laws on the books but enforcing them is an entirely different matter.

      Micro-lending could be a profitable business for a Filipino. A person would be helping others and providing an income for themselves. Something to consider.

  6. Tried to send you a message through facebook, but I believe you have messaging turned off? Had a link I wanted to share with you. I will check into that log-in problem. I don’t have a clue why it would require that but, hey, I’m new at this. You can say I’m learning by default! 😛

  7. Okay Dave, check out my site’s comments settings. The only requirement I have set is the the ‘Comment Author’ must fill out a name and email to make a comment (same as on most WPress sites). Unless you are previously registered on my site under your Yahoo name, you cannot use a Yahoo ID to leave comments. I also DO NOT require anyone register before making comments. If you know of something internally that may be toggled differently, please let me know. Thanks for the promo.

    1. Well, I tried to leave a comment with another email address, Randy. It requested my WordPress password, also. I don’t see it on your website yet but I didn’t get a message that my password was invalid.

      I don’t require any registration either for anyone to leave comments but I will be moderating all comments for awhile before releasing them. Again, good luck on your site. I’ll add it to my blog roll.

  8. A 5/6 loan really isn’t that bad. Some credit cards in the States get up to 28% plus fees. They can become 30 year loans.

    1. That’s a good point, Gary. Plus, I don’t know if it still holds true, but the credit company could sign you up for a special low rate and then jack it up at their discretion.

  9. So thats who that guy was!!!!, The day after we stepped off the plane (passport stamped Balikbayan 😉 ). The Asawa sent me to the “parlor” to have 30 years of infantry calouses removed from my feet. In walks a guy who I could swear was east indian (with motorcycle helmet) The ladies were differential, but not subservient, money exchanged hands, and note pads were signed and countersigned. I didnt noticed any real tension in the air. But I have no doubt now that i wistnessed a 5/6 transaction.

    1. Congratulations on your arrival, Scott H. Glad you got the Balikbayan without any problem.
      No doubt, you witnessed a 5/6 transaction. Funny, since I posted that article, I’ve noticed the Indian lenders on the pump boat to Guimaras now. Keep us posted on your adventures.

  10. Dave,

    I really miss everyone there, and hope and pray that everyone has a healthy and happy Christmas !!

    Till I Return,

    Fearless Frank from Florida

    1. We miss you, too, Fearless Frank. I was visiting Tom at “The Farm” and he informed me your baby goat friends miss you also and are praying for your return to the Philippines.

      Merry Christmas to you from Melinda and me and the whole crew. Take care.

  11. Im reminded..a few years ago I had a filipino friend who owned a small stall in the local market.Of course most of the stallholders live hand to mouth and were financed by an Indian moneylender.This particular chap became very heavy handed with his collecting so……..one day after he had made his collections and departed on his motorcycle a few of the stallholders were waiting …in discise they ambushed and robbed the unsuspecting fellow ….The money was redistributed to the stallholders …..When the Indian loanshark returned to the markets with the police of couse everyone was in shock to hear what had befallen the poor guy ……..only in the Philippines

    1. The money lenders have to use some common sense, Clarrie. Heavy-handed tactics won’t get you very far here. You’ll get a dose of that vigilante justice that your story points out. For anyone that has never been to the Philippines, the phrase “Wild Wild West” is not too far off the mark.

  12. Wild West indeed. Those stall-holders will have seen nothing wrong at all in what they did – and therein lies the big problem. Juan Ponce Enrile sees nothing wrong either in doling out P1.6 million of taxpayers’ money to other Senators (each, that is; more or less) claiming that it’s “legal” that it’s “not a bribe” that it was “surplus funds” and that he can do what he likes anyway and who the Hell do you think you are challenging me over such matters? Many Filipinos tell you that they have “Christ in their hearts” but they sure as fekk don’t have his teachings on their Moral Map!!

  13. Whats the saying Keith ………a dead
    fish becomes rotten from the head down …..so true

  14. Yes, Clarrie, that’s right. And until the people themselves stop voting for corruption and indiscipline or for “celebrity”, nothing can change. People see that Estrada was convicted of plunder and yet, somehow, he is excused; or it was (as he says himself) a ‘mistake’ and so he can run for Mayor of Manila (how come he’s not disqualified?!!) and will probably win. Needless to say, this (and countless other examples) makes the RP a laughing stock elsewhere. The rot starts at the head of the fish, but the tail is rotten too: in the barrios, they grumble about the corruption of politicians on high, and then accept P100 to vote for Juan as Barangay Captain, or whatever, and think nothing of it. “Everyone does it; it’s the norm.” NO! My view is that P-Noy needs, through Education in the schools, to root out corruption at BARANGAY level first!!

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