It was reported last week that Police had rounded up 15 people suspected to be involved in illegal money lending, commonly known as ‘Banque Lambert.’
Only two months ago, another 14 suspects were arrested and later prosecuted for being part of this racket.
The Central Bank and Police say that the arrests are part of the campaign to end this illegal act in which people have lost money and property to loan sharks.
Much as this practice should not be encouraged, it is equally important to ask ourselves why it persists.
Banque Lambert is surviving partly because many of our commercial banks are failing to meet their obligations. Access to loans from some of our banks is as difficult as paddling upstream.
The difficulty ranges from the kind of collateral they demand to the time it takes to finalise the paper work for a loan application.
Even under very clear circumstances, it takes close to three weeks for some banks to exhaust their procedures before making the first contact with an applicant.
In many cases, the collateral demanded does not tally with the amount applied for.
Although vigilance is critical in this industry, given the amount of non-performing portfolio suffered by these banks, it equally frustrates clients if the banks are not genuinely keen on giving out loans.
In countries where the banking industry is competitive, it’s these financial institutions that seek out clients.
Unfortunately, even with almost 10 commercial banks operating in the country today, this culture is taking long to pick up.
Therefore, one way of doing away with the illegal money lending schemes is to ensure that our banks reach out to the public. There must be innovative packages designed for different market segments, so that more and more of our people flock to the banks.
Otherwise, if accessing a loan is seen as a favour done by the banks, then their potential clients will always look elsewhere.