Moneylenders and Their Customers

Using in-depth interviews with managers, 8 collectors and 31 customers of 6 licensed moneylending companies, the paper examines the relationship between licensed moneylenders and their customers. It states that licensed moneylenders do not use violence or intimidation to extract repayments from the poorest people in society. It says that an estimated 1,200 licensed moneylending companies employing 27,000 people visit 3 million customers in their homes each week. The findings reveal that:

• Majority of licensed moneylenders are women working part-time;
• Moneylending business is built on friendship rather than fear and collectors have close personal relationships with their customers;
• Positive reasons for using a moneylender are small loans, weekly repayments, doorstep collection and the absence of default charges if some repayments are missed.

The paper concludes that the licensed moneylending industry is being regulated, and is regulating itself, in a satisfactory manner. But some aspects of the service need review.