Residents angered by illegal banks

PALU, Central Sulawesi: Illegal banks operating under the guise of loan cooperatives in Banggai regency have angered local residents, Antara reported on Saturday.

The news agency said at least seven illegal banks had expanded their operations to remote villages in the regency.

They give unlimited loans, but with interest rates of up to 120 percent per month, the news agency reported. It added that the banks' management obliged customers to pay daily installments on their loans, and those who failed to make their payments risked having their valuables confiscated.

Antara said a debtor had electronic goods worth Rp 3 million (US$428) confiscated for failing to pay Rp 300,000 he owed to one of the illegal banks. Some residents have even been forced to surrender their land certificates to the illegal banks.

Provincial police chief Col. Soeroso said the police had not taken measures against the illegal banks because there had been no official complaints.

Thousands of customers of three illegal banks rallied for days to demand the local government take action against the management of the banks, which fled with Rp 20 billion of their money. (04)