Poor people who have no other means of getting funds feel that they have no other option except to borrow from unscrupulous moneylenders. Interest repayments which never seem to come to an end imprison them in a cycle of ongoing debt, leaving them in a worse position than before they had taken the loan. Even after many years, the principal amount (the initial capital borrowed) is untouched and the loan which was meant to help them becomes a yoke around their necks.
This is yet another example of the exploitation of poor people. The most obvious impact is financial – many borrowers report that they actually become poorer, having to pay interest for years. But borrowing from Baniyas is detrimental on so many other levels too.
Borrowing from loan sharks is often a fate worse than death for poor families, leading to forced labour and slavery. Here are some of the realities these families face:
At Akhuwat, we fight loan sharks who prey on poor families through our Liberation Loans. With them, we wipe out the debt a family owes to the moneylenders. We pay off the total balance in one lump sum, including interest to settle the debt completely. The stress that the borrowers carry worrying about how they will pay off this loan is immediately relieved. The loan shark is removed from their lives and they are freed from the burden of never-ending interest payments. To date, we have helped thousands of people by granting them loans of between PKR10,000 to PKR100,000.
The monthly repayment amount is fixed and repaid within a fixed period (maximum 3 years), so borrowers know there is an end to the debt. This makes a huge difference as borrowers can plan and budget for the repayments, knowing that the loan will be repaid within a short period. Once the loan is repaid to Akhuwat, the monies that loan recipients were paying as instalments can be used for other household expenses or to invest in anything else their families may need. This gives them the freedom to start making a better life for themselves and a better future for their children. Most importantly, they are no longer at the mercy of unscrupulous moneylenders.
Akhuwat
Akhuwat provides collateral- and interest-free loans to underprivileged families so they can help themselves out of poverty. With one of the highest loan return rates in the world, Akhuwat continues to transform lives one loan at a time. Akhuwat is registered in the UK with the charities commission (registered charity number 1136317)
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