Unserviceable debt drives more people to suicide By Sunita Menon, Staff Reporter Published: July 11, 2008, 00:50
Dubai: Rising debt has led to a rising number of suicides among Indian expatriates, according to an Indian Welfare Trust.
According to the trust the main cause for suicide is because people are unable to pay off their debt.
Suicides among Indian expatriates have been on the rise since 2003, said K.V. Shamsudheen, chairman of the Pravasi Bandhu Welfare Trust.
The trust has an ongoing initiative “Sandwanam” (Consolation) that aims to reduce suicides among expatriate Indians. He said debt has trapped many low and middle income Indian expatriates in the UAE. A good number of Indian expatriates could not even pay interest to the lenders. Main sources of credit are bank loans, credit cards and individual illegal lenders.
“The interest rate varies and depends on the source of the loan. While banks are charging up to 8 per cent for loans, on credit cards interest can be up to 30 per cent and individual lenders charge from 72 per cent to 120 per cent. The spending habits of expatriates and their dependents play a very important role in getting people into debt.
“Once a person becomes a non-resident Indian, the family back home will start spending lavishly without considering the financial situation of the breadwinner,” said Shamshudeen.
He said in expressing their love and affection for their families, Indian expatriates who fall in the middle income group try to meet all the financial needs of the family back home, sacrificing even basic necessities and taking out loans without regard for the consequences.
“If there is any possibility to get a loan from a bank that will be their first option. When they cannot pay back the bank loan they apply for credit cards and take loans from the credit cards. When both become overburdened they will take loans from individual lenders with exorbitant interest rates,” said Shamsudheen.
“In some cases the minimum payment on the credit cards is more than their monthly salary. Such cases are increasing day by day,” he added.
Shamsudheen has been spreading awareness on financial planning and frugality, cautioning people not to fall into the debt trap. “I have conducted 150 training sessions for more than 40,000 people all over the Gulf. The Government of India should also take the initiative to educate the dependents of expatriates to spend within the limit of their earnings, after saving for the future,” he said.