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Friday, 22 August 2014

Money on the Road: The History of Indian Money Lenders in the Philippines

For some Indian nationals, particularly Punjabi's and expatriates which hail from India, the Philippines has become a haven for those who want to find a new start in life as most Punjabi's have resorted in becoming money lenders that provide quick loans to those in need of a fast alternative in acquiring money for their specific needs. Money lending has become a lucrative business among Indian nationals that some of them have even decided to remain in the Philippines on a permanent basis. The Philippines has attracted many foreigners such as the Chinese and the Indians who had been plying their trade ever since the colonial time of the Spanish regime. 

The first wave of Indian nationals that came to the Philippines were called the Sepoy's. They were among the few immigrants that came along with the British expedition during the early 18th century and have chosen to remain permanently to live among the natives of the country. Most of the early Indian settlers had made their home in the Eastern part of the adjacent towns near the outskirts of Manila which was accessible through the Pasig river. The small settlement is now called Cainta, in which many of the localities descendants have Indian ancestry.

All throughout the century, a mass grove of Immigrants from India came over to the Philippine to do trade with the Spanish government and the locals alike, bringing with them their cultural heritage along with their cuisine and their business which was basically, lending out money. Punjabi's tend to earn handsomely through lending out money which is also termed as micro financing. Money lending, the Indian way goes about the principle of charging a 10% percent interest which is calculated on a “5 to 6” ratio, meaning they instantly get high returns on the money that they lend. But, they don't just lend out money to anyone. The 5-6 principle goes about the method of putting on an interest rate that will double the money that they have put out to the borrower as it will be calculated on the terms of every 1 peso will have a profited interest of about 20 centavos.

If the loanable amount of 100 pesos is paid within 1 month, there will be an interest of 20 pesos which is the terms set upon by the Indian money lender. If the Indian money lender has put into his capital 10,000 pesos, he will automatically earn 2,000 pesos on interest alone which is just the cost of money being borrowed! Often times, a borrower will not be able to pay their debt on time, forcing them to pay the interest as their loan's interest keep piling up on them, enabling the lender to earn interest at no extra cost. Debt is indeed a liability that can be profited to a great extent that the money which was used in capitalizing the loan, earns by itself.

The loan is good for a whole month and the lender goes to each person that has borrowed money from him on a daily basis for a whole month. This arrangement is based purely on mutual trust that is recorded on a small notebook which the lender brings with him to record any payments made or any payments missed. The Indian money lender usually goes about the time before noon as to make certain that their borrowers have already earned their mornings sale. There are some occasions that the lender can't be paid by the borrower for certain reasons and in some cases, other borrowers just disappear without a trace, leaving the poor money lender behind without any assurance that he will ever get paid.

The business of lending out money in the Philippines by Indian nationals all started way back in the 1930's when a Punjabi immigrant loaned out 5 pesos to a Filipino, which he eventually got back 6 pesos in return which included interest and it was then that the Indian business of lending out money got the name “5-6”. Indian nationals that go about lending money in the Philippines ply their trade on motorcycles, scouring the busy streets and looking for potential borrowers on a daily basis. They go the busiest market place as they tend to lend money to small business owners that have small shops that are located in heavily populated areas, particularly the market place. 

They usually lend out money to people who are engaged in businesses such as street peddlers or people that do business in the market place or other similar establishments that earn on a daily basis. They also lend out money to store owners which are situated in small communities that operate stores that sell general items. Indian money lenders know that people who operate small businesses of their own are likely to be good payers and do comply with the terms of payments on a daily basis. 

One of the most astounding thing about Indian money lenders is that they do not grow tired of personally going to and fro to collect their money from their borrowers. One Filipino local was heard saying that the Indians are one of the most hard working people that they ever met that they can be compared to the bees who do not grow tired of their work. True to this observation, the Indian expatriates in the Philippines had profited from all of the hard work that they put in establishing themselves as a means of helping people with the service that they provide in regards to lending money for those who are in need.

Regardless of the high interest that they obligate their borrowers, many still borrow money from them because there are no other quick options to turn onto. The Indian money lender is considered as one of the most trusting of all small loan providers as they only live upon the basis of mutual trust in exchange for the money that they lend people. The most smallest amount of money that a lender can give a borrower starts at 500 pesos. All that an Indian lender has to keep an accounted record of the loan that a borrower has taken is written on a small notebook which acts as the lenders ledger. Indian money lenders are very good when it comes to accounting the money that the had provided their borrower as they keep tabs on all of their transaction into this small notebook which the borrower signs on every time they make a payment.
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