The Samoa Government is trying to find ways to lower consumer loan defaults and reduce potential encounters between police and bad debtors.
Prime Minister Tuilaepa Dr. Sailele Malielegaoi, confirmed on TV3 that he met met officials from the Central Bank and financial institutions to discuss the issue.
“We met early in the week with the Central Bank, bank companies [and] small loan companies that entice [people to take out] loans with high interest,” the Prime Minister said.
The Ministry of Police and the Ministry of Justice and Courts Administration also attended as they deal directly with debtors that are unable to repay their loans.
“And this goes back to living within your means.”
He said there are numerous family affairs that ignite this mentality that because you’re a chief in your village you’re obligated to fork up more [money] and in the end, your children here and overseas suffer.
Under the current laws, bad debtors can face prison terms not exceeding six months, and prisoners should be released if their debt is paid sooner than their sentence.
Police have complained about chasing up bad debts being a drain on their resources.
Member of Parliament, Ali’imalemanu Alofa Tuuau, had appealed to the Government to introduce laws to monitor financial service institutions that target low-income families with high-interest rates.
“If I loan for $1,000 I get only $800 and yet I pay back $1,500 and this does not include the $200 previously deducted,” the MP said.
“There should be laws in place to govern these types of loans, especially the interest rate are quite high”.
Sili Epa Tuioti, Minister of Finance, said the problem is under the law, the Central Bank of Samoa does not play a regulatory role when it comes to financial institutions.
“But I have already consulted with the Governor of the Central Bank, and by the next Parliamentary session we will have the law ready for consideration.”
