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Debt, desperation and displacement

The vicious cycle of borrowing and repaying in Dhaka slums
SHAHEEN MOLLAH and NILIMA JAHAN
Just six years ago, 37-year-old Kabir Hossain, a butcher from Bhashantek slum in the capital, enjoyed a comfortable life with his family of six.
By 2018, he owned Tk 12 lakh in cash, a meat shop, a motorcycle, and a leased car.
However, by 2020, he found himself indebted to 30 creditors, owing a total of Tk 20 lakh. Of this amount, only around Tk 5 lakh was the principal; the remainder consisted of high-interest charges from loan sharks.
To manage these debts, Kabir borrowed from microcredit organisations, only to fall into a cycle of borrowing to repay, further escalating his debts.
Facing mounting pressures, Kabir eventually fled his home, leaving his family to sell their belongings to survive.
Like Kabir, many slum dwellers in the city are enduring a miserable phase with mounting informal loan burdens.
While banks and Non-Bank Financial Institutions (NBFIs) typically offer loans with annual interest rates ranging from 10-15 percent, these loan sharks provide loans at much higher rates, often between 15-20 percent per month.
The Daily Star found that such loans, in different slums of the capital, are known as “emergency loans”, and are taken for urgent needs like paying microcredit loan installments, medical expenses, business stock purchases and spot gambling.
“After several months of constant losses that depleted most of my savings, I borrowed Tk 1.5 lakh to expand my business, agreeing to supply 15kg of meat monthly. However, I couldn’t repay the amount on time, and had to keep supplying meat, which caused further losses,” Kabir shared.
“To repay, I took a microcredit loan and turned to lenders with 15-20 percent monthly rates to pay the microcredit installments. With no profits and lenders taking earnings, my debt ballooned to Tk 20 lakh,” he explained.
“At one point, a lender detained and beat me for money, but my father-in-law bailed me out,” he added.
“In 2019, I fled due to constant pressure, because they would crowd my house demanding money. A year later, upon my return after an arbitration, I resumed business, but if they didn’t receive payment, they would take away my meat, preventing any profit,” he explained.
“I then tried selling vegetables, but it wasn’t profitable enough to repay loans,” he said.
“Failing, I had no choice but to send my 11-year-old son to work at a hotel for Tk 6,500 per month. We had to sell everything -- fridge, TV, furniture, plates, and glasses.”
After Eid-ul-Azha this year, Kabir fled the slum again due to lender pressure. Despite promising to repay through sacrificial animal butchering, he couldn’t earn enough to satisfy the creditors.
Two days before Eid, Kabir’s son broke his hand while working, needing Tk 40,000 for surgery. Hindered by lenders, Kabir risked permanent damage to his son’s hand.
According to Johura Hossain, Kabir’s
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