A recent incident of a migrant worker who died of suicide because of his inability to pay back a loan shark has sparked an outcry in Bahrain, and calls for the government to take action against predatory lending practices. The death raised urgent questions about the depth of the problem in the kingdom.
In a popular expat portal, a worker enquired about seeking a loan of BD1000 (US$ 2,652), willing to pay interest. They were warned against doing so by other users.
But loan sharks look out for such requests and promise 'easy credit' at an unjustifiably high rate of interest per month. In case of late payment, they resort to unethical debt collection practices that can traumatise borrowers, including blackmail, threats of harming their family back home, physical threats, threats to misuse personal documents such as passports, defamation, and more. These lenders tend to be unauthorised and operate without regulation. Many of these loan sharks are linked to organised crime syndicates in their home countries, according to law enforcement authorities.
Debt, Death, and Despair
Rajeevan Chelapuram, of Mallapuram in Kerala, India, died by suicide in October last year. His family say his death was unquestionably linked to loan sharks. Rajeevan worked in Bahrain for over 15 years, in a building material supply company. He was the sole breadwinner for his family and is survived by his wife Simjisha, two sons aged four and seven, and his elderly parents.
In a letter dated 16 February 2023 to authorities in India and Bahrain (below), Simjisha revealed evidence of a connection between her husband’s suicide and a moneylender. Simshija wrote that she found information on her late husband’s mobile indicating that he had borrowed money at a very high-interest rate from another migrant worker, a compatriot from Mallapuram who worked in a carpentry shop in Hamad Town. Simshija says the deceased had borrowed around BD700 (US$1860) from the lender prior to the pandemic to settle some debts back home. However, he could not return to work in Bahrain due to Covid restrictions for almost a year, leaving him without the income to pay back the loan as planned.
“We do not know the exact date as to when he borrowed the money – but we learnt it was around BD700, post-Covid, as we found him struggling to pay the interest amount,” said his brother-in-law Jyothish Kumar.
Simjisha also discovered that the lender received over BD1,270 (US$3370) from the deceased between December 2021 and September 2022. She has attached the payment statements in her complaint letter, along with copies of the remittance advice. Payments, presumably the monthly interest amount, apparently were made to different people and different accounts, as directed by the lender over messages and voice clips.
The last voice clip Rajeevan sent to his lender, allegedly shortly before his death, seems to confirm the link.
Simjisha included a translation of the voice note in her letter, which reads:
“Maniyetta, Ok, Bye. Nothing more to say. You have cheated me. You said that if I stay here, you will see that you will take me away. I am not staying here for that. You have also said that if I stay here until you come back, I will not see the outside world. Therefore, I will do what is required before you come. You are the only one responsible for my death. You have eaten all the money which my children are entitled to. You have cheated me. I have sent money to all the accounts to which you have asked me to send. I can’t do this any more. At least after my death, return my money to my family if you are willing to do it. If not, you and your children can eat that. I have nothing more to say beyond this. Bye.”
Urging authorities to take appropriate action against the person she believes is responsible for her husband’s death, Simjisha wrote:
“As you are aware, the private moneylenders who are lending money at exorbitant rates, as much as 10% per month, are a menace to the society. At the rate of 120% a year, the interest payment for the first year itself is more than the principal amount. The payment continues for several years all payments being adjusted against the interest. As a result, many like my husband are forced to take the extreme step of committing suicide, leaving their wives widowed, and their children orphaned.”
Local initiatives amid a growing problem
Local reports confirm that loan sharks are not a new issue in the Kingdom. In 2016, Bahrain’s prosecutors charged two men with premeditated murder and theft following the murder of a Pakistani loan shark in Hoora. The victim was a 47-year-old Bahrain Defence Force (BDF) employee, while the suspects were Filipino nationals.
In 2019, reports surfaced of an illegal loan shark’s attempted kidnapping of an Indian migrant worker, Krishnankutty Suresh, over unpaid debt. Suresh managed to escape and subsequently reported the matter to his embassy. He had an outstanding debt of BD500 (US$1326) to the loan shark and was supposed to pay BD49 every month in interest, but this did not reduce his debt. He had paid a total of BD1,149 in interest alone — more than double the amount he owes.
In 2018, a group of volunteers who call themselves the Palisha Virudha Samithi (Committee Against Interest) came together following an alarming number of expatriate suicides that year — according to the Gulf Daily News, 31 migrant suicides were reported in 2018, 23 of them Indians. The group, now attempting to seek official recognition, was originally founded in 2010 to help loan shark victims.
Palisha Virudha Samiti’s convenor, Kashmikandy Yoganandan, claims more than 95% of expatriate men who committed suicide in Bahrain did so because they were facing pressure from loan sharks.“Usually the interest rate is BD10 (US$27) per month and most of the time people end up paying more than double what they borrowed,” said Yoganandan. “Some are genuinely in need of money and are forced to borrow, but a good number of them do so because of poor financial planning.”
The group tries to help those indebted by mediating with loan sharks. They aim to make moneylenders feel the pressure and know they will be held accountable in case of fatalities, explains Yoganandan. The group has also set up three hotlines group for victims of loan sharks to call.* The group receives at least two calls a week on average. In a recent week, the group says five victims reported paying monthly interest ranging between BD45 and BD60 (US$120-160), which did not go towards reducing their debt.
Pravasi Legal Cell (PLC) is another volunteer group which provides legal assistance to migrants.
PLC Country Head Sudheer Thirunilath expressed concern over the situation noting that PLC is following up on Rajeevan’s case. “We are in receipt of a copy of Rajeevan’s wife’s letter and PLC is extending all support for the family in this case. Late Rajeevan’s phone was with Bahrain Police authorities and with the help of our advocate collected the same, after opening it we got the necessary voice clips related to his death being linked with a loan shark. As per our instruction, the family filed the case and also our advocates in India will help them with further steps.”
Precarity of lower-income migrants
Lower-income migrants across the GCC lack social protections and financial inclusion, with certain banking products like personal loans on reasonable interest unavailable to them. Precarious employment, low wages, and rampant wage theft render migrants particularly vulnerable to exploitation by loan sharks who fill these protections and service gaps.
While Bahrain's government must take strict action against predatory lenders and provide legal support and counselling for victims, it is equally imperative to address why migrant workers fall into financial stress. This requires taking strict action against delayed wages and wage theft, establishing a minimum wage commensurate with the cost of living, and expanding migrants’ access to social security systems, including unemployment benefits
Palisha Virudha Samiti’s hotline numbers are +973-3388-2835, +973-33754-8156 and +973-3845-9422.
Photo Credit: Dennis S. Hurd