Interest free loan needed for poor to protect them from clutches of private money-lenders

[We don't endorse any particular society or bank but people and NGOs can pĺset up such models]

NewsBits.in

The need of hour is to have a financial institution providing small loans without interest.

It can be a model, either a cooperative bank or a society, that provides loan to the needy but doesn't charge interest from the borrower. Sensing how high interest rate causes suffering to people, it is essential to provide loan in such a way that the needy didn't get overburdened.

A large number of people go to private money lenders or financial institutions that provide money at a high rate of interest. However, in sharp contrast, the Credit Society mayn't charge anything except taking office fee from the borrower. 

Rather than interest, the system might seek a security in lieu of releasing the money. For example, the borrower may be able to deposit gold as a guarantee and get a loan of Rs 50,000 to 1 lakh. Once they are able to return the money, they can take the security, back, and have to pay nothing extra.

Otherwise, the borrowers get caught in this cycle and end up paying a huge amount and despite their best efforts, are unable to come out of the clutches of the money-lenders, because of the excessively high interest rates. Sometimes they end up paying many times more than the original amount. 

The aim is to give a loan under micro-finance and providing loan to people who need it for urgent needs, supporting a small business, medical expenses or educational fee, such system can help the society in a big way.

As, it is a sin to take interest in Islam, there is need to provide such loans. It is a sin to take interest. The aim should be that we must lend money to people who need it, and let them return it, without any interest. People are happy because they don't have to pay extra amount. It may save women from fraud and exploitation from local financial groups.