MONEY-LENDING among those whom the banks would never extend a loan to, and those who believe borrowing from the banks is a lot of paper work and red tape, is a highly lucrative business operation, albeit a lot of hard work, sacrifice, and patience.

But then, the profit these “alien” lenders make is so big at 20 percent interest, I think it is well worth their sacrifice and patience. This kind of lending that is all over the rural areas is operated only by the so-called “bombay” or the Indian nationals.

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In the town where I live, just across the street from a private religious high school and the central elementary school, there are a number of small entrepreneurs’ makeshift stores that sell all sorts of items, from candies, bread, snacks and rice and viand for all sorts of buyers among the school children and tricycle drivers and daily wage earners who work in the vicinity of the schools. To have their “small business” going, they borrow cash from the Bombay, payable daily based on a so-called 5-6 arrangement.

Five-six means that for every P5 amount of loan, the borrower returns P6 on a daily

basis.

Thus, if one borrows P500, and agrees to pay back P10 daily over a period of 50 days, he or she has to prepare P12 daily to be picked by the lender on a motorcycle who passes by the small store on a particular time every day until the amount is fully paid. That is, granting that the borrowers have religiously paid the loan daily for the duration. If the borrower is not a good payer, then it takes longer for the loan to be repaid.

Under this set up, the government misses out its share of the interest paid. This is, in essence, an “outlaw” lending operation that exists beyond the pale of the Bureau of Internal Revenue. Thus, the suggestion of a Cebu City lady councilor to let the BIR impose a tax on what she calls as informal lenders, I believe, is a move in the right direction. However, what I am afraid of is that once the barangays start collecting the taxes from the “bombay” lenders, the transaction would already be “5-7,” too.

Certainly, the informal moneylenders would not take the BIR’s imposition of tax on their profit sitting down. They consider the 20 percent interest take on the loan as fair for the hard work and sacrifice they render daily to make it a going business concern for them. So, putting up an additional 20 percent interest would only even things up for the lenders.

But of course, all these would depend on the way things would be done. I think the alien money-lenders thrived because they offer a simple, easy way of life for the borrowers.

Many of the bombay’s clients are largely schooled only up to the intermediate grades.

Some have reached first or second year in high school, while most of them are in the primary grades, hard able to read or write. So, it should not make us wonder why they disdain paper work, and just love to do things without any bit of paper work.

The absence of paper work and red tape makes “5-6” a huge success.