By Anusha Thapa_____

Bhaktapur, Nepal — Despite government claims that literacy and living standards have improved, thousands of Nepalis continue to fall victim to illegal loan sharks charging exorbitant interest rates. Critics argue that weak access to formal credit and poor enforcement have allowed the practice of meter-byaj (loan sharking) to flourish—even in areas surrounding Singha Durbar, Nepal's main administrative complex.

Many people turn to private lenders after banks refuse to provide loans due to insufficient income, even when borrowers own valuable property. According to the article, loan sharks allegedly accept property as collateral, obtain bank loans using that collateral, and then lend money at extremely high interest rates while providing borrowers with only part of the agreed amount. In many cases, borrowers reportedly lose property worth several times more than the money they actually receive.

A growing trend reportedly involves short-term business loans, where borrowers receive NPR 100,000 but are required to repay daily installments with excessive interest over 95 days. Missing even a single payment results in additional penalties, trapping many small business owners in a cycle of debt.

Nepali law limits private lending interest rates to 10 percent annually, yet the article claims illegal lenders continue to operate openly around the Singha Durbar area. The author questions why authorities, including the Finance Ministry and Home Ministry, have failed to stop these activities.

The article also argues that Nepal's banking system contributes to the problem by making loans difficult to obtain for ordinary citizens and small entrepreneurs. While banks accept deposits from low-income people, they often require stable income or established businesses before approving credit. As a result, many individuals are forced to rely on informal lenders.

According to the opinion piece, easier access to affordable loans could encourage entrepreneurship, create jobs, increase tax revenue, and reduce dependence on illegal lenders. It further claims that many families have lost homes and property due to loan sharking, while some victims have experienced severe mental distress or even died by suicide.

The article concludes by urging the government to strengthen enforcement against illegal lenders, reform lending policies to improve access to formal credit, and better protect citizens from financial exploitation.