‘Bumbay’ loans sharks thrive due to our financial apartheid


Marlen V. Ronquillo

This we have to admit. The Indian nationals you see on motorbikes across the country are, indeed, loan sharks. The interests they charge are beyond the capacity of their borrowers (victims is another word) to pay. It is anywhere from three (3) percent to five (5) percent a week, or 12 percent a month at the very least. Their charges are inhuman but in the desperate, excluded -from-the-lending -mainstream urban and rural areas, there is no alterntive.

I know of many next of kin and sari-sari store owners from the barrio whose attempt to engage in small-time retail have turned them into cash cows for the “Bumbays.”

Why can an inhuman form of lending thrive for so long? Mr. Duterte has finally ordered a stop to loan sharking. In his usual colorful words, he asked the police to arrest the “Bumbay” loan sharks. Good move. But this question is worth asking. What next? Will the financial authorities fill up the credit slack? And we have to look at the environment that has made the loan sharks virtual birds of prey.

The phrase “credit slack” is the central story on why the “Bumbays” have thrived, and here is an explainer .

The “Bumbay” loan sharks entered the sharking scene as the old forms of usury in the agrarian areas started to take a backseat. The old form of usury involved borrowing palay and repaying in palay after every harvest season (which is two times a year). The interest charge, naturally, was in palay form and words such as “tersiyuhan” or “takalanan” were used to denote the level of interest rate. Anyway, the standard rates were mostly from one third of a sack to half a sack for every cavan of palay borrowed, the interest and the principal due after six months. The richest in an agrarian setting was mostly the barrio lender. I know of this because my tenant-father, during desperate times and after crop failures, turned to the barrio usurers for the family’s version of “bridge financing.”

No, not bridge financing. My father had to borrow from the barrio usurers, this is the whole truth, so he and his family will have something to eat until the next harvest season.

At some point in the late 1970s, the palay-based usury was rendered obsolete and borrowing in cash and repaying in cash became the norm. The usual barrio lenders lent to farmers while the growing small-scale retail sector went to new but more aggressive lenders – the “Bumbays.” From the initial market of sari-sari store owners, the “Bumbays” then expanded their lending activities, mostly to households that acquired appliances they could barely afford. The “Bumbays” also became the main source of small, usurious loans in the urban areas.

The “Bumbays” saw a credit slack, filled it with steep interest rates and a ferocious collection effort, then dominated the loan sharking of households and small retailers.

Now, they are in the eye of a potential storm. We now go back to “credit slack” Who will fill it once the “Bumba

The Philippine financial system has made it its business not to lend to the poor. Many reasons for this. Just look at this administrative aspect. A P100 million loan to one person or a single business entity is part of the banking system’s daily grind but only for premium borrowers, or new borrowers with reliable credit standings and adequate REM. The paperwork and the administrative aspect of lending is easy with just one borrower.

But what if a hundred poor borrow that P100 million? It would be messy (the paperwork) and time consuming. All the bank loan inspectors will have to work overtime.

But the administrative grind is only a skin-deep reason. The real reason is the anti-poor bias of the banks. The Philippine banking system practices its own form of apartheid. For the rich and adequately collateralized only. The banks do not lend to the poor because the poor can only mortgage their desperation and their poverty.

In a previous piece, I wrote than even when the law provides dedicated lending to the vulnerable – such as lending to farmers under the Agri-Agra Law – the banks always comply with the “alternative modes of compliance” written in the law to escape lending to small farmers.

What more if there is no law that makes it mandatory for banks to lend to the other sectors as desperate and credit-hungry as the small farmers?

The poor and the other vulnerable sectors need to be part of the formal credit mainstream to improve their lot, to fund small businesses, to ease the burden imposed on them by the loan sharks. But except for the largely inutile Agri-Agra Law, there is nothing in the financial system that makes it imperative for the banking system to lend to these sectors.

The “Bumbay” loan sharks are for real and they really bury the poor deeper into poverty and hopelessness. But they thrive because of the apartheid practiced by the financial system, which need not post its most important rule: For the rich and adequately collateralized only.

The “Bumbay” leaders are Exhibit A of a greater malaise, whether we admit this sad fact or not.


Please follow our commenting guidelines.


  1. We can enumerate many different kinds of ideas, solutions and suggestion , but every Filipino must remember that as long as the corrupt rich and elite controls all corrupt sitting politicians, this long-standing problem will continue and take advantage of the less fortunate. Hopefully this current President will introduce an executive order to rid of 5/6 loan sharks practices And if Those Congressmen and Senators vetoed the bill. then do not vote for them ,unfortunately there is one big problem ( Smartmatic sells the position to a candidate – the highest bidder, come election time).

    • Aces, pare, Will NOT Need “corrupt rich & elite in control” when Poor but net-savvy pinoy sari-sari TPS StoreOwner Members all over pinas make 500,000 pesos araw-araw by 2020.

      Mindset: $0.001/day x 10m emerging middle-class red china = $10k/day @50(forex) = 500,000 Pesos Per Day.

      ANO kamo? https://youtu.be/2iSM8F8SJoQ

  2. Might the solution, either temporary or permanent, be to legalize the lending activities of the Bumbays and others engaged in the 5/6 scheme? Since the government chose to ignore the poor’s needs, and we all know there IS a dire need for financing among the poor, why not?

    Wait…before you jump into conclusions…of course stringent rules and regulations must be adopted, as well as legalese that will govern the lending activities. Every one must be licensed, must be made to undergo scrutinity i.e. NBI and PNP clearances etc.. deposit requirements (each prospective lender must have a deposit in a trust account some amount that will exclude the shady characters and operators, and whatever else is deemed necessary for its success. I’m sure readers will have their suggestions on how to make this work.

  3. Ang solutions sa marami natin’g pag-durusa ay nasa puso ng bawa’t isa sa ating lahat na pilipino…sa buong mundo.

    That PERMANENT Solution must appeal sa gusto’ng nakaka-rami (democratic) & kung saan, lahat puedeng kikita (capitalism).

    p.s. Most, if not all, i’ve seen here are either problem-analysis/kwento or else the usual band-aids, that usually lead to more complicated situateions, like having more & more people in-the-same-room with varying motives, addressing pabalik-balik na problems.

    p.s. bagong problema, na…man, oh…;-)

  4. This will continue as this sector of borrowers has the highest default rate. Lenders need to cover this high risk

  5. In fairness po sa mga bumbay, marami sa ating mga kababayan ay napagtapos nila ang mga anak nila sa pag-aaral sa tulong ng 5/6 na yan. Ang tiyaga kasi nilang galugarin ang mga suluk sulok ng maynila at iba pang lugar para lang makapagpautang pero siyempre, malaki rin ang risk nila (i.e. holdap/ma-1/2/3, makikilan ng mga tambay etc.) Paran na rin masasabing “necessary evil” kumbaga. Tama ang analysis nyo, isipin nyo kung amgpapautang ang bangko ng worth P100M sa mga mahihirap, ang daming paper work at sakit sa ulo. Kumpara sa magpautang sila ng P100M let say sa SM, less ang ang sakit ang ulo at merong collateral pa. Sa mga mahihirap, ang collateral ay tiwala, pangako at chansa na hindi matakbuhan…

    • Paperwork? Create change. Adopt proven successes (like Phase 1, below). Lots of risks/manual sakit ng ulo are already history with Online Apps. In fact, the net is now on the verge of the 2nd phase:

      Phase 1: connects 3-7 Billion people via e-mail, fb, google, social media et al;
      Phase 2: will connect 50 Billion devices thru so-called “Internet-of-Things.” where the Big Boys are now re-investing their phase 1 profits.

      Next Question: Pahu-huli pa ba ang pinoy? Get on-board now. Timing is everything.

      DO NOT DELAY. “Bak-up d’ trak!” ;-)

      p.s. it is understood…”nothing beats face-to-face/personal dealings!”

  6. The solution is micro financing. The late Corazon Aquino tried to implement but it was too late, she died. In India, it was very successful. In fact the person that implemented the process was given a Nobel a price in Economics.

    • To The Max, solution ‘yan ng Mayaman para yumaman pa sila. kaya: rich always gets richer, and rich —– poor gaps keeps widening. “gagalit duterte, gusto tulong mahirap.”

      Ang Solution DAPAT: Mahirap para sa Mahirap. Magkaroon alhat ng mahirap ng pag-asa kumita gaya ng Red Chinese mindset. Ang pinas >100m young population, marami naka-cellphone na puno instagram/fb APPs.

      Ma-mera-mera x Volume: singko singko everyday times 10,000,000 chinese = 500,000 pesos daily!

  7. This is very important.

    If DSWD, congress and senate have huge budgets to squander, why not address this basic foundation of the country.

    Should have more articles/exposes’ like this.

    • Agree. But first, we must rely & trust ourselves. Secondary na’g dswd or mga politicos, who all have their own agendas/motives.

      Ergo, Only a UNIFIED common tao/pinoy population, like EDSA people power, each with a potential to make 500k pesos per day extra income(by say 2020), can.

  8. And yet I hear those poor people say that these Indian nationals were able to help them get through with life. Can the government do the same thing they do like collecting every day or every week and also give small loans without any background check? The middle class is shrinking because we pay for everything and even the SSS, for example, has to be salvaged by the members even though our contributions were used to fund businesses of favored people. I pity the poor but because they are many hence more votes, the battlecry is to subsidize the poor’s needs most of the time. When can the middle class who have no tax shields actually experience direct help from the government through the taxes we paid in various forms like VAT, income tax, property tax. Once the middle class diminish, the government will have less people to tax to subsidize the poor’s needs. That time is actually being felt right now as we slowly join the poor since our properties can be auctioned off if we can’t pay our property tax and our jobs can’t be sustained by our employers.

    • “shrinking middle class”? Many Practical Solutions: check TPS138 model. Dito, bibigyan ng add’l source of long term income(probabilities!) lahat ng net savvy mobile > 100m pinoy. many can & will earn extra $10k or 500k daily, in 5-10 yrs vs. the 5 mins it takes to sign up Free today, kasing bilis’t dali mag-bukas ng fb acct.

      Lifetime, no-brainer. make probable 500k pesos everyday, by 2020(?)”..not asking u 2bilib sa kakayanan ko 2create, but in YOURs…obama”

  9. You are so correct in telling this Mr. Ronquillo, and not only that they do loan sharking they are also drug dealers. If you look at the FBI files the Indian Mafia considers the Philippines as one of their territory. They go to small apartments in QC and live there for years and our government does not even care if they are illegal in our country.
    I have distaste with this people, since Filipinos in the states particularly computer programmer & computer engineers lost their jobs because of them. If you have any relatives in the US ask them who controls the IT department, they do. And they will only hire Indians like them!
    I have a friend who own a Dunkin Donuts for more than 20 years and he lost it to the Indians, only because the Indians hired a private investigator and looked if any are working illegally in the shop, true enough he did, but that is not the point. The Indians are known to hire illegals especially their kind. Do you know that the 3rd largest illegals in the US are Indians?
    If pres DU30 will only kick them out of here, I will be very happy!

  10. Bumbays are nothing compared sa mga pinoy na nagpapa 5-6. Dito po sa amin 20% ang patubo every 2 weeks. There are others na mas malupit pa jan kc 1 week lang tutubo agad ng 20% ang inutang mo…

  11. Maria Stevens. on

    These ‘so called’ loan sharks are providing a valuable service to small business..The REAL LOAN SHARKS are the credit card companies who charge 32 percent per month.

    • Solutions come from Within Oneself.

      What u’r seein’ r the realities of Market Forces. eka ni Erap, “sino ba’ng nag-order n’yang forces of Supply & Demand?” ;-)

      Democratic Capitalism tayo so far…hindi pa Autho-ritaRian Communism(despite Digong & his old press & new kakilala’s patin’s xia zi ming?)

  12. One Possible Response to Perrenial Pinoy Malaise: Convert ALL sari-sari stores to Online, including ALL 100m smartphone carrying pinoys. Take 3,000 million retail considering netizens, worldwide, and then wait-to-ACTIVATE free acct at your convenience.

    What’s 5 minutes-to-register a FREE TPS acct vs. the potential probability of making $10k daily [just say, $.001 or 0.05 centavos x 10m global netizens na lang = $10k/day or 500,000 pesos/day? eka nga Obama: “not asking’ u 2believe in my ability 2create, but in YOURS…”

  13. Solution for >100m smartphone-carrying kababayans: Front load ahead of > 3,000 million retail sales consumer netizens, worldwide. Convert ALL our sari-sari stores to Online. Free StoreOwner Memberships provided by TPS: The Perfect Solution.

  14. I hope this article will start to eliminate this usury practice which has driven the poor no choice to survive financially, and I hope President Duterte and all Representatives will introduce a law that will help the poor ,in their finances, and new banking regulations should be instituted which will have an inclusive program assisting them to obtain small loan to run their sari-sari store so they will not resort to no other than “Bombay Loan Sharks.” and from the rich elite who are insensitive to the needs of the poor and less fortunate.

  15. I agree with your assessment of the problems of the poor. The financial system is not friendly to the poor. But, I can’t lay the blame on the ‘system’ entirely.

    Part of the problem seems to lie within the culture as well. For example, when our kids first started school, the practice of birthday parties for children was nothing more than financial one-upmanship among parents. We felt pressure (granted – it was in our own minds) to provide our kids with the same level of ‘affluence’ shown by other parents. I’m not even sure why the school even permitted such a practice or allowed so much time for parties. Now, our fifth grader has been begging for an i-phone because classmates make fun of him for his ‘cheap’ cell phone. Not sure why schools even permit cell phones or don’t provide access to phones for an emergency.

    Now in your article, I fully understand the need to borrow for the basic necessities of life. Sadly, I think these days, part of the problem is that we confuse necessities (like food) with non-essentials (like an i-phone or Jollibee birthday parties). As parents and consumers, part of the problem also seems to lie with the well-intentioned but poor financial choices we make for ourselves and our children.

    • Beyond analyzing mga reasons sa ‘ting mga matagal at recurring problemas, there must be…eka ni Mayor Villegas o ni lolo JPE: ACTION AGAD! >>>

      The Perfect Solution. Kinu-kuyog na ngayon ng intsek. 1m pa lang sila lahat, 3 every 1minute or 5k per day!

      i-pasok o front-load natin mga pinoys, well ahead of the 400m pa’ng middle-class chinese naka-umang sumali sa TPS Online Mall business. FREE, quick & easy sign-up, then keep/hold free act, waiting to ACTIVATE once magkan-darapa sila’ng sumali sa The Perfect Solution.

  16. Mr. Ronquillo, coming from a family of farmers you understand the difficulties and sometimes the desperation faced by small farmers in trying to feed their families.Yes the banks need to devise effective and efficient ways to help this group of people who desperately need assistance. The government on its part should work in tandem with the banks so that one area of poverty may be addressed.

  17. The obvious solution is to open a publicly owned bank that is dedicated to agriculture with focus on small farmers. Never mind if it doesn’t make money, it purpose is to develop the farming sector. After all isn’t the farming sector in practically all western countries including America subsidized? All we need is the political will to overcome the objections of the WB-IMF mafia. Duterte looks like the kind of president who will be open to this idea.