Egypt recently passed a new law to combat usury and punish lenders who charge exorbitant interest rates. While the new ordinance is aimed at protecting borrowers from predatory lending practices, some experts warn that it may have unintended consequences that could harm the local lending industry.
Genuine lenders may avoid lending
According to local sources, the new law could discourage genuine lenders from providing loans to those in need. This is because the law imposes harsh penalties on lenders who charge interest rates above a certain threshold. Some lenders may be afraid of unintentionally crossing this threshold and facing legal action, even if their interest rates are reasonable.
This could be a significant problem in Egypt, where banks are not easily accessible, particularly for the poor. Many people rely on local lenders to meet their financial needs, and if these lenders stop lending, it could have serious consequences for borrowers who have no other options.
Unequal power relations at the root of usury
Some experts argue that the new law does not address the root cause of usury, which is unequal power relations in society. They argue that as long as these relations exist, usury will continue to be a problem, even with new regulations in place.
In many cases, borrowers are forced to turn to usurious lenders because they have no other options. These lenders take advantage of the borrowers’ desperate situation and charge exorbitant interest rates, trapping them in a cycle of debt.
Infiltration of protests by loan recipients
There are also reports of loan recipients who have infiltrated protests against usurious lenders, taking advantage of the situation for personal gain. These individuals may have borrowed money from genuine lenders but then failed to repay the loan, leading to legal action. They may see the protests as an opportunity to avoid paying back the loan or to negotiate more favorable terms.
Experts warn that these individuals should be discouraged from taking advantage of the situation, as it could harm the overall goal of the new law, which is to protect borrowers from predatory lending practices.
Conclusion
While the new usury law in Egypt is aimed at protecting borrowers from predatory lending practices, experts warn that it may have unintended consequences that could harm the local lending industry. Genuine lenders may shy away from providing loans, and the root cause of usury – unequal power relations in society – has not been addressed. Additionally, loan recipients who have borrowed money from genuine lenders may be infiltrating protests against usurious lenders, taking advantage of the situation for personal gain. It remains to be seen how effective the new law will be in addressing the problem of usury in Egypt.
Frequently Asked Questions
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What is the Muluki Civil Code?
The Muluki Civil Code is a legal code in Nepal that governs civil matters such as property rights, contracts, and family law. It was first enacted in 1854 and has since been revised multiple times, most recently with the ordinance mentioned in the news article. -
What is usury?
Usury refers to the practice of lending money at an exorbitant or illegal rate of interest. It is often associated with predatory lending practices that target vulnerable individuals who are in desperate need of financial assistance. -
Who is Judge Gauri Bahadur Karki?
Judge Gauri Bahadur Karki is a retired judge in Nepal who was appointed by the government to lead a three-member commission tasked with investigating accusations of usury in the country. He has also served as the Chief Justice of the Supreme Court of Nepal. -
What is anti-money laundering act?
Anti-money laundering (AML) refers to the set of laws, regulations, and procedures aimed at preventing the illegal generation and transfer of funds through financial institutions. The anti-money laundering act mentioned in the news article is a specific law in Nepal that aims to combat money laundering and other financial crimes.
