Some banks claim that they suffer because many people do not pay back their loan installments and as a result they incur huge losses. Reality, however, shows the opposite.
SAUDI media constantly shed light on the role of banks in our society and the way they lure citizens to the loan trap. Banks mount advertisement campaigns encouraging people to take loans. They highlight the advantages of bank loans while hiding the negative consequences.
The media highlighted the social disaster that happens as a result of loans and falling victim to tough and vague conditions put forth by the banks, which are not visible when a person taking the loan is signing the debt contract.
Some banks claim that they suffer because many people do not pay back their loan installments and as a result they incur huge losses.
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Reality, however, shows the opposite. I am not trying to hurl accusations here, but I am trying to explain the details of an individual case.
I lived through the experience of helping a poor woman, along with other good-doers, paying her loan back. The woman took the loan in an effort to invest in a field of business. The tough conditions she faced later in her business and the changing rules made it impossible for her to continue as a businesswoman, so she spent the remaining amount on personal expenses. It became financially exhausting for her to pay the monthly installments of the loan, and she ended up most of the time, asking people for financial help.
The good-doers noticed that if they gave her the amount directly to pay the monthly installment to the bank, it will not work for two reasons. The first reason is that she sometimes use the money meant to be paid to the bank to pay for her emergency personal needs.
The second and the most dangerous reason is a relative of her who once heard she received charity money forced her to withdraw the amount because he wanted it to settle his own problems. She gave him the money because she did not want to upset him.
The good-doers then decided to go to the bank directly and offer to deposit a certain amount that will take care of her monthly installment payments for a couple of months, so they will not deduct the amount from her poor salary. The bank refused to accept the deposit under the condition that it is specified for the loan installment payment. Instead they would deposit the amount in her checking account, from which she could withdraw money and use it for her personal expenses. This would lead to a repeat of the same problem where she spent the charity amount elsewhere, or her relative withdrawing the amount for himself.
I decided to get involved and I took the amount myself to the bank. The customer service agent refused the money I give him to pay part of her loan, giving flimsy excuses. He did not care about the personal condition of the poor woman. I went to the branch manager and I received a very bad treatment from him as if I was asking him to pay the amount himself. Again he refused my requests despite all the begging I did.
Then I told the bank manager that they used to claim that they pay collecting agents to chase after defaulters, and I was doing it for free. The bank claimed that people were not paying their installments and I was offering to pay on behalf of the woman. After a long debate, the bank suggested that the woman would come to the bank with another woman and deposit the amount herself toward loan repayment. They woman went to the bank the next day, but surprisingly the bank refused to receive the amount, demanding that she either pay the full loan, or the amount will be deposited as cash in her checking account. That again meant the woman could withdraw the amount for her personal expenses or her relative would take it.
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