The government has formed a new inquiry commission to propose measures for controlling usury (loan sharking).
A cabinet meeting on March 10 approved the formation of a three-member commission, chaired by Baburam Regmi, with Bharat Bahadur Bohora and Badri Prasad Bhattarai as members. This marks the third such commission established in the past two to three years to tackle the issue.
Previously, in March-April 2023, the government formed a commission under former Special Court President Gauri Bahadur Karki. A year later, in March-April 2024, another commission was led by former judge Tej Bahadur Karki.
Concerns Over Repeated Commissions
“The key question is whether the government intends to simply form commissions or actually implement their recommendations,” said former judge Karki. “It appears that another commission is being created because usury victims are preparing to protest again.”
Under his leadership, the previous commission collected complaints and facilitated negotiations between loan sharks and victims. While victims had demanded Rs 7.62 billion in settlements, loan sharks ultimately agreed to settle for Rs 1.72 billion.
The ordinance introduced at the time criminalized usury, leading to more settlements after the commission warned lenders that legal action would be taken if they refused to negotiate under the new law. The ordinance has since been passed by Parliament.
Usury Now a Criminal Offense
The law explicitly criminalizes the forced transfer of a borrower's immovable property to a lender. It also prohibits charging interest that exceeds the principal loan amount.
Past commissions were established after victims of loan sharks marched long distances to Kathmandu and staged protests. In the Terai region, loan sharks have been known to exploit borrowers by charging excessive interest or using fraudulent means to seize their property. This persistent issue has led to repeated protests over the last two years.
